Monero (XMR), a leading cryptocurrency that focuses heavily on privacy, saw its price explode over the weekend, peaking at $317 on Sunday. A suspected widespread cyberattack on government institutions drove this increase. Roughly $330 million worth of Bitcoin was exchanged for Monero. The event stands as the largest single-day movement into Monero ever. It has focused the crypto community’s attention on important discussions around digital asset security and the role of privacy-focused coins within the digital asset ecosystem.
By Monday, the Monero exchange price settled in the neighborhood of $280. Still, that was a stunning 22% jump from what it was worth before the tragedy. Though investigations into the hack continue with the help of forensic agencies still tracking the movement of funds, it’s unclear who was involved in the attack.
The Heist and Conversion
Very early on Sunday evening, a suspected hacker did something incredibly daring. This is because they moved more than $3 billion worth of Bitcoin from a wallet associated with long-term holders to various crypto exchanges. These Bitcoin holdings, which had been stagnant since 2017, began moving for the first time just a month before the hack occurred. The hacker then went about laundering this Bitcoin into Monero (XMR) on six different exchanges.
The conversion process included lots of small transactions which turned into hundreds of minuscule orders. Hackers frequently utilize this strategy to obscure the source of stolen money. It does not help that it makes tracking those funds much more challenging.
According to multiple sources familiar with the federal investigation, the hacker’s process for converting Bitcoin to Monero was extremely inefficient. While this was a very inventive strategy, it resulted in significant loss due to transaction fees. Crypto conversion was an expensive ordeal. It is estimated that the suspected hacker lost “multiple seven figures to fees” through the conversion.
Investigation and Key Players
The theft of Bitfinex’s Bitcoins, then conversion to Monero, is still under investigation by the top forensic agencies. Some big names from the cryptocurrency security community are investigating the incident. ZachXBT and Yehor Rudytsia from Hacken are hands-on investigating the ongoing situation and tracing the money.
The engagement of these specialists indicates the immense severity of the situation at hand. It further highlights the collective spirit to find the attacker’s technique. We are hopeful that their findings will be used to make security measures even more robust across the entire cryptocurrency ecosystem.
The case is under investigation as a theft, with the FBI, National Park Service, and other leading forensic agencies following the case closely.
Regulatory Implications and Market Response
Now that Monero’s price has increased dramatically following the hack, these discussions – and accusations – have drawn sharp lines in the cryptocurrency community. These conversations center around security vulnerabilities and the unique role of privacy-enhancing cryptocurrencies. The episode has unfolded amid rising regulatory concern about privacy coins specifically.
European regulators are in the midst of passing legislation that would make it virtually impossible for privacy-enhancing cryptocurrencies such as Monero to exist. Proponents of such rules claim that these coins are used for nefarious purposes. They further argue that these coins complicate law enforcement’s work.
The enforcement action has sparked cryptocurrency circles into a passionate debate. People are unwittingly engaging in a discussion about security vulnerabilities and Monero’s (XMR) special place in the ecosystem.
