Atomic wallet identifies 4 possible but unconfirmed causes of recent breach

Atomic Wallet, which suffered from a hack on June 3, has narrowed down the possible causes of the breach according to a recent statement.

In the statement, the non-custodial platform said the breach could have been caused by viruses on local user devices, malware code injection, infrastructure breach, or a man-in-the-middle attack.

In a man-in-the-middle attack, perpetrators intercept communication between two parties, like Atomic wallet and a user, to steal information. Atomic Wallet asserted that none of the listed causes are confirmed, suggesting the exact cause of the breach remains unknown. It stated:

“At the moment, none of the possible issues are confirmed as potentially causing massive breaches, as such types of attacks are very hard to recognize.”

The firm added that since it does not store or access users’ private keys, its investigation into the exact cause of the breach becomes “complex.”

Atomic Wallet is trying to recover the stolen assets

Atomic Wallet said that on receiving reports of the hack, it immediately changed the access to its servers and put its internal processes in ‘under attack mode.’ The platform also halted app downloads and updates.

The firm is working on a security update for its app to “reduce the chances of potential future attacks.”

Atomic Wallet engaged Chainalysis and Crystal to conduct an ongoing investigation into the attack. In a report on June 13, Chainalysis said that Atomic Wallet users collectively lost over $100 million in the attack. At the time, around $1 million of the stolen assets were frozen on exchanges.

According to Atomic Wallet, the stolen funds are being laundered via crypto mixers and other services, but “most of them remain traceable.” The platform is working with major exchanges to freeze the stolen funds. However, users need to wait until all the stolen assets are seized before they can expect the recovery of their losses. The firm stated:

“We are actively working with crypto incidents investigators and authorities. The next step will be working on a legal framework for seizing frozen deposits and distributing them among affected users.”

Users are frustrated

Since the breach, Atomic Wallet users have become increasingly frustrated with the lack of updates from the firm. While the June 20 statement offered some insight, it unlikely provided the clarity users sought.

Many users remain unsatisfied with the lack of a compensation plan or specific details on when they might get their assets back. The firm maintained that less than 0.1% of Atomic Wallet app users were impacted by the hack, which some users have challenged.

Moreover, Atomic Wallet said its builds are “verified by external auditors.” Yevhenii Bezuhlyi, a former smart contract audit head at the cybersecurity firm Hacken, questioned who the auditors are and where their statements are.

Regarding a 2021 audit by Least Authority, the auditor stated the platform was “insufficiently secure” and placed users at “significant risk” in a blog update written in Feb. 2022. The post has since been unpublished from its website, and a search for ‘atomic’ wallet revealed no results. However, CryptoSlate was able to access an archived version.

CryptoSlate has contacted Least Authority but has not received a response as of press time.

Furthermore, Least Authority stated that Atomic Wallet is believed not to have addressed several issues highlighted in its initial audit.