Mercado Bitcoin Says It Will Cover $38M Security Loss

Brazilian exchange Mercado Bitcoin says it will cover about $38 million lost in a security incident, after attackers moved funds from its wallets and the exchange suspended platform access as a precaution. The company says customers will not lose assets. CoinDesk’s report says Mercado Bitcoin also reported that about $11 million had been frozen with help from Tether, Circle and Chainalysis.

How did the attackers move the funds?

The attack began in the early hours of November 2, according to blockchain analytics firm Chainalysis. It says an attacker moved assets held across 17 blockchains in waves, draining an estimated $49 million in various cryptocurrencies. CoinDesk reported the exchange’s lower estimate of about $38 million and said security researchers initially traced more than $40 million.

Crypto exchanges hold some assets in “hot wallets,” which are connected to networks so transactions can be processed. Chainalysis says the Mercado Bitcoin incident involved assets across multiple chains, including Bitcoin, Ethereum, Base, Tron and Polygon. Moving funds across those networks means investigators must identify and trace transactions on each one. The difference between the exchange’s estimate and Chainalysis’s estimate remains unresolved in the reports.

How were some of the assets frozen?

Investigators trace stolen coins to wallet addresses, then share that information with organizations that can intervene. Chainalysis’s account of its response says its investigators mapped unauthorized transactions and passed information to law enforcement, stablecoin issuers and other partners. It says this helped freeze nearly $10 million in stolen funds.

Some stablecoins can be frozen by the companies that issue them, preventing transfers from certain addresses. Bitcoin and Ether do not have the same issuer-controlled freeze mechanism, so tracing those assets does not itself stop them from moving. Chainalysis says it worked with Tether, Circle, Paxos, Anchorage Digital and Ripple during the response. Mercado Bitcoin’s reported $11 million freeze and Chainalysis’s nearly $10 million figure are separate published estimates of the response.

What does Mercado Bitcoin say happens to customers?

The exchange says it will cover the loss so customers do not bear it. That is a company assurance about who absorbs the financial impact; it does not mean the stolen assets have all been recovered. CoinDesk reported that Mercado Bitcoin said no customer data leaked and that its teams were investigating, tracing assets and coordinating with authorities.

Mercado Bitcoin suspended access as a precaution after the incident. The reports reviewed here do not confirm when all services will resume. The confirmed change is that the exchange has put its loss at about $38 million and pledged to cover it, while investigators and partner firms continue tracing funds and seeking further freezes.

References

• CoinDesk’s report — coindesk.com
• Chainalysis’s account of its response — chainalysis.com