PATNA (CoinChapter.com) — Kronos Research, the market maker of the crypto trading platform WOO Network, has lost $22 million in a recent hacking incident.
The firm reported unauthorized access to some of its API keys, immediately going into damage control mode and suspending all trading activity on Woo Network.
Kronos Research assured users of its efforts to address the security lapse via an X post. The firm claimed the funds at risk did not construe a “significant portion” of its equity. Later on, WOO Network confirmed that transaction activities were suspended due to security issues.
It’s Not Me, It’s You: WOO Network
Meanwhile, speculations ran rife that the WOO Network was the victim of the security breach.
The trading platform assured users that “first and foremost,” client funds were secure. WOO Network claimed that since Kronos Research was the primary liquidity provider for its spot markets and “around 40% for perpetual futures,” the platform paused trading to protect users from low liquidity.
The trading platform announced the resumption of perpetual trading within hours of suspending trading activity, with spot trading resuming later.
Not Kronos Research’s First Security Breach
Interestingly, the security breach was not Kronos Research’s first security issue. In Aug. 2023, the firm faced a $1.4 million loss due to internal sabotage by two of its engineers. The two employees were angry over unpaid bonuses.
A direct link between the Aug. 2023 incident and the latest hack remains unconfirmed. However, the incident does raise questions about Kronos’s security and internal controls.
Furthermore, the firm claimed that losses due to the hack amounted to $22 million. But, crypto sleuth ZachXBT claimed that the total loss was around $25 million, or more than 12,800 ETH.
Is WOO FTX in the Making?
The internet started discussions on WOO Network’s ethics, with traders arguing whether WOO Network had some ulterior motive in halting operations. X users dug up a March 2023 post that shared the terms of service for the WOO Network.
Per its terms of service, WOO Network can allow market makers to trade on other exchanges using client funds deposited with the platform.
If it sounds familiar, the reason is that FTX exchange (and Sam Bankman-Fried) did the same thing with user funds, except that WOO Network has taken users’ “permission” through its terms of service.
As such, the security breach did raise speculations of WOO Network likely going the FTX way with user funds.
