Monero Community Wallet Comes Under Attack, Here’s What We Know

The Monero community has recently come under seizure and the perpetrator successfully drained the wallet of all its asset. 

Markedly, the incident, which took place on September 1st but was not disclosed until November 2nd, led to a total loss of 2,675.73 XMR from Monero’s community crowdfunding wallet. The hacker meticulously drained all the tokens in the wallet in nine separate transactions.

At the current market price of the XMR token, the loot is valued at approximately $460,000. 

Monero’s Community Crowdfunding System 

One Monero developer identified as Ricardo “Fluffypony” Spagni opines that the attack was “unconscionable”, citing that the bad actor made away with funds that could have been meant for a contributor’s rent or food.

Ordinarily, Monero’s Community Crowdfunding System (CCS) is designed to raise funds for development proposals from its members. According to another Monero developer Luigi, the CCS wallet was set up in 2020 on an Ubuntu system in addition to a Monero node. It is worth noting that only Luigi and Spagni had access to the seed phrase of the wallet.

Source of Breach Remains Unknown 

Whenever Luigi had to make a payment to a community member, the developer made use of a hot wallet that has been on a Windows 10 Pro desktop for the last six years. As expected, this hot wallet was funded by the CCS wallet whenever the need arose. Luigi stated that the source and the cause of the breach are yet to be identified. 

“The CCS Wallet was drained of 2,675.73 XMR (the entire balance) on September 1, 2023, just before midnight. The hot wallet, used for payments to contributors, is untouched; its balance is ~244 XMR. We have thus far not been able to ascertain the source of the breach,” Luigi said.

Crypto Attack Trend in the Industry 

Spagni strongly believes that the breach may be linked to a recent string of attacks on cryptocurrencies which the industry has been faced with. In April, DeFi lending system Hundred Finance suffered a breach that led to the loss of $7 million in crypto assets. A few months later, $7.5 million worth of Ethereum (ETH) was drained from the Jimbos Protocol. 

Unlike most of these other attacks where some funds were recovered, it is not certain if the Monero community would be able to trace its missing holding, especially as XMR is a privacy-centric token.