Phemex crypto exchange halted withdrawals after being alerted to nearly $30 million worth of suspicious outflows that raised alarms among blockchain security firms.
Phemex saw over $29 million worth of crypto transfers across multiple blockchains including BNB (BNB), Polygon (POL), Arbitrum (ARB) and Base (BASE), according to onchain security firm Cyvers.
The outflows point to “suspicious transactions” involving the Phemex hot wallets, Cyvers stated in a Jan. 23 X post:
“Over $29 million worth of digital assets have been transferred by suspicious addresses. These addresses have already begun swapping assets to $ETH.”
Phemex suspicious outflows. Source: Cyvers
Cryptocurrency hackers often convert stolen funds to Ether (ETH) to launder them through crypto mixing protocols like Tornado Cash, which makes the funds difficult to trace.
Cyvers’ co-founder and chief technology officer, Meir Dolev, highlighted that 125 suspicious transactions were recorded across 11 blockchains, with some assets already swapped to bypass freezing measures.
“Some of the tokens and stablecoins already have been swapped to avoid freezing.”
In response, Phemex announced on Jan. 23 that it had temporarily suspended withdrawals to conduct a comprehensive security inspection and enhance its wallet services:
“To ensure security, withdrawals have been temporarily suspended while we conduct an emergency inspection and strengthen wallet services.”
Phemex incident response. Source: Phemex
Despite the suspicious outflows, the exchange’s “cold wallets remain safe and can be checked by everyone else,” Federico Variola, CEO of Phemex, said in an X post.
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Crypto hackers stole $2.3 billion in 2024
The suspicious activity at Phemex follows a broader rise in crypto-related hacking incidents. Hackers stole over $2.3 billion worth of crypto in 2024, across 165 incidents, representing a 40% increase from $1.69 billion in 2023, according to Cyvers.
Funds lost per attack vector. Source: Cyvers
To curb the trend, the industry needs to prioritize more robust security practices, such as private key management with offline storage and real-time threat monitoring systems, according to Deddy Lavid, co-founder and CEO of Cyvers. He told Cointelegraph:
“By prioritizing education, collaboration, and security innovation, we can significantly reduce these vulnerabilities and foster a safer Web3 ecosystem.”
Related: US court overturns Tornado Cash sanctions in pivotal case for crypto
An emerging blockchain solution, known as offchain transaction validation, may prevent 99% of crypto hacks in the future, by preemptively simulating and validating blockchain transactions in an offchain environment, Cyvers’ vice president of GTM strategy, Michael Pearl, told Cointelegraph.
Cyvers’ Michael Pearl, interview with Cointelegraph’s Zoltan Vardai. Source: YouTube
Pearl said Cyvers’ solution could have detected the malicious smart contract that led to the $230 million WazirX hack eight days before the funds were lost.
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