The Financial Conduct Authority warns against Poloniex after $100 million hack
The Financial Conduct Authority (FCA) has added the Poloniex cryptocurrency exchange to its warning list following a $100 million hack that occurred in late November 2023. The FCA’s warning page, published on December 6, states that Poloniex “may be promoting financial services or products” without the regulator’s permission. The FCA advises users to avoid dealing with the exchange and suggests that the trading platform may be targeting individuals in the U.K.
Surge in crypto hacks leads to over $300 million in losses
November 2023 saw a significant increase in financial losses due to crypto hacks, with total losses surpassing $300 million. The major contributor to this surge was the $100 million hack of Poloniex, where hackers gained access to the exchange’s hot wallet and made unauthorized withdrawals of assets. This breach is notable as it was the second-largest private key compromise of the year.
Poloniex settles charges for allowing trading in sanctioned nations
In May 2023, Poloniex agreed to pay $7.6 million to settle charges related to allowing users from sanctioned nations to trade digital assets on its platform. Despite processing know-your-customer (KYC) information and IP address data, the U.S. Treasury’s Office of Foreign Assets Control found that the exchange processed over 65,000 transactions totaling more than $15 million for customers in sanctioned regions between 2014 and 2019.
Hot Take: FCA warns against Poloniex as losses from crypto hacks continue
The inclusion of Poloniex on the Financial Conduct Authority’s warning list serves as a reminder of the risks associated with cryptocurrency exchanges. The $100 million hack suffered by Poloniex highlights the vulnerabilities in hot wallet storage and the importance of robust security measures. Additionally, the settlement reached by Poloniex for allowing trading in sanctioned nations raises concerns about compliance with regulatory requirements. As losses from crypto hacks continue to rise, it is crucial for users to exercise caution and conduct thorough research before engaging with any cryptocurrency exchange.
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