BlockTower, the crypto hedge fund, suffers a major exploit, but how?

A major cryptocurrency hedge fund, BlockTower Capital, has emerged as the latest company to take a major hit from hackers. Hackers have reportedly infiltrated the company’s system, stealing large sums from its assets under management (AUM).

The amount leveraged remains unknown, but the company is working blockchain forensic analysts to investigate the matter.

Hacker Partially Drains BlockTower’s AUM

Bloomberg reportclaimed that scammers compromised and partially drained BlockTower Capital’s AUM, citing sources familiar with the matter. While BlockTower has yet to make any official statement, PitchBook data revealed that it has $1.7 billion in assets under management.

The stolen funds have yet to be recovered, while the fraudster is still at large. However, the crypto hedge fund is working with forensic analysts to determine the nature of the exploit.

BlockTower came on board in 2017, opening offices in New York and Miami. In 2022, the company generated approximately $150 million as a venture fund.

The company has also ventured into various digital asset sectors. These include strategic investments in Sky gaming studio Mavis, NFT developer Dapper Labs, and Terra USD stablecoin issuer Terraform Labs.

This is not the first setback BlockTower Capital has faced since its launch. In 2023, the crypto hedge fund closed its “market-neutral” crypto fund, which managed assets of more than $100 million. The decision came after the fund lost all its investment opportunities.

Increasing incidents of crypto attacks in the industry

The cryptocurrency industry has seen several exploits in recent years. One of the most recent attacks is the Soone Finance hack. On May 14, 2024, blockchain security firm Cyvers reported an attack on Soon Finance, a DeFi protocol.

The platform exploit came as a series of attacks. Initially, Cyvers noticed the $3 million drain from Sonne’s USD Coin (USDC) and Wrapped Ethereum (WETH) contracts on his Optimism chain.

However, the stolen amount increased as the hacker continued to drain funds from the platform. According to the security firm, the exploiter stole approximately $20 million in digital assets.

Sonne Finance confirmed the incident on its official account an hour after the attack. It mentioned discontinuing its operations on Optimism but directed users to its marketplaces on Base.

DeFi Protocol states: “All markets on optimism have been put on hold. The markets on Base are safe.” The protocol team also revealed its ongoing investigation into the exploit and promised to provide more details later.

Last week, a hacker used a poison scam to drain over $71 million in WBTC tokens. However, after negotiations, the scammer returned the stolen funds.

Additionally, the Bahrain-based Rain exchange lost a staggering $14.8 million worth of BTC, ETH, crypto.

The blockchain detective ZachXBT first escalated the exploit, exposing the security compromise on the exchange’s platform.

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