Cryptocurrency Hacks Continue to Plague the Industry
Cryptocurrency hacks remain a significant issue in the industry, eroding trust among users. According to blockchain security firm Peckshield, hackers stole over $3 billion in 2022 alone. The latest victim is infrastructure firm Fortress, which recently disclosed a third-party API security breach resulting in an undisclosed amount being stolen. However, Swan Bitcoin, a company that uses Fortress for custody purposes, claims it was not affected by the hack. Swan assured its customers that their Bitcoin holdings were safely kept in cold storage with sub-custodian BitGo during the hack. The company emphasized its security procedures, including video calls, physical access, and on-chain visibility, to prevent asset loss. Swan’s partnership with Fortress and BitGo, known as the “tri-party” model, was implemented after the Prime Trust incident to ensure daily reconciliations and secure transfers.
Fortress Breach and BitGo’s Response
BitGo CEO Mike Belshe echoed Swan’s statement, clarifying that BitGo was also unaffected by the Fortress hack. Belshe expressed disappointment in Fortress for downplaying the incident and not disclosing it promptly. He revealed that Fortress ignored BitGo’s advice to disclose the breach sooner. Fortress publicly acknowledged the security breach on September 7, mentioning that four customers were affected but not disclosing the stolen amount. Ripple subsequently acquired Fortress and covered the losses resulting from the hack. The incident has raised concerns about Swan’s partner selection process and due diligence procedures, casting doubt on the company’s ability to ensure the security of its users’ assets.
Hot Take: Swan Bitcoin’s Trustworthiness Questioned Following Fortress Hack
The recent security breach at Fortress has raised doubts about Swan Bitcoin’s ability to choose trustworthy partners and maintain robust security measures. Although Swan claims that its customers’ holdings were not affected by the hack, questions remain about the company’s due diligence practices. The partnership between Swan, Fortress, and BitGo, established after the Prime Trust incident, aimed to enhance security and transparency. However, the Fortress breach has shown that vulnerabilities still exist. Additionally, BitGo’s CEO distancing his company from the fallout highlights the severity of the incident. To regain trust, Swan Bitcoin must demonstrate improved partner selection and more rigorous security protocols to protect its users’ assets.
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