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Deribit hack: When will client withdrawal ban be lifted after $28m hot wallet loss?

By Raphael Sanis

Edited by Charlie Mellor

10:17, 2 November 2022

Deribit's logo on a phone, which is in front of cash
Deribit keeps 99% of its users’ funds in cold storage wallets – Photo: Shutterstock

The cryptocurrency trading platform Deribit lost $28m worth of funds in a hack on 1 November.

Deribit, which specialises in derivatives trading and the crypto options market, saw its bitcoin (BTC), Ethereum (ETH) and usd coin (USDC) hot wallets compromised. 

This news follows a difficult peroid for cryptocurrencies with October as the worst month for crypto hacks. More than $718m was stolen by attackers in just the first two weeks, according to Chainalysis.

BTC to USD

What happened?

On 2 November, Deribit tweeted that its hot wallet was hacked the previous day and $28m was stolen. However, it emphasised that clients’ assets were not affected.

The trading platform said: “It's company procedure to keep 99% of our user funds in cold storage to limit the impact of these type of events.”

As well as clients’ assets, the protected funds included those using the Fireblocks banking platform and anyone utilising Deribit’s cold storage addresses. Derbit tweeted:

XRP/USD

0.62 Price
+2.970% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

ETH/USD

3,344.71 Price
-4.120% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

SOL/USD

178.53 Price
+1.960% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.2652

BTC/USD

65,626.85 Price
-0.500% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00
“The hack is isolated and quarantined to our BTC, ETH and USDC hot wallets.”

The derivitaves exchange said it would be paying for these losses through its company reserves, rather than the insurance fund.

ETH to USD

Halting deposits and withdrawals

Deribit stopped deposits and withdrawals on the platform to enable the exchange to perform security checks. This included activity from third-party custodians, such as Cobo and Copper Clearloop.

The trading platform has not given an exact time when it would continue processing withdrawals and deposits. However, Deribit said it would re-open when it is “confident all is safe”.

It tweeted: “Deribit remains in a financially sound position and ongoing operations will not be impacted.”

Markets in this article

BTC/USD
Bitcoin / USD
65626.85 USD
-332.3 -0.500%
ETH/USD
Ethereum / USD
3344.71 USD
-143.44 -4.120%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that Capital.com believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

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