The significant crypto crash from last week didn’t just affect traders; it also resulted in the loss of millions in stolen funds held by hackers who mismanaged the market during the chaos.
Lookonchain, a blockchain analysis platform, has identified at least six wallets associated with known hackers that collectively lost over $13.4 million by panic-selling ether amidst the downturn.
The hackers involved seem to belong to a criminal group recently engaged in cryptocurrency theft, indicated by the “6 hacker wallets” losing over $13.4 million, hinting at a coordinated operation likely tied to a known hacking syndicate.
Buying high, selling low
The sell-off initiated when one wallet sold 7,816 ETH at $3,728 per coin, coinciding with the sharpest part of the crash. As the price continued to plummet, five additional wallets followed suit, exacerbating the market drop.
Instead of holding their sold assets in stablecoins or trying to launder the ETH, the hackers repurchased the same amount — 7,816 ETH — at $4,159 as the markets rebounded, further compounding their losses.
By October 18, blockchain analytics showed that the total loss from these trading errors had escalated to $13.4 million.
Considering the volume of funds (approximately $29 million in the latest transaction alone), these hackers are likely sophisticated individuals with access to advanced tools for exploiting vulnerabilities within decentralized finance (DeFi) protocols, exchanges, or smart contracts.
Panic selling
The trading behavior of the hackers in such volatile market conditions indicates that while they may be adept at exploiting ecosystem players, they respond to market fluctuations akin to any over-leveraged trader: with emotional decisions and poor timing.
Lookonchain characterized this behavior as “panic selling,” while some in the crypto community humorously suggested that the attackers might be “great hackers, terrible traders.”
It wasn’t all their money
Nonetheless, the hackers likely obtained those funds through illicit means. Therefore, even though the losses are substantial, the money was probably not rightfully theirs to begin with.
Blockchain analysts speculate that the ETH stemmed from prior attacks, implying that the hackers were trading with assets they had never actually purchased.
In this regard, the losses might not sting as they would for ordinary traders.
Consider this analogy: if someone stumbles upon a briefcase full of cash, misuses it in gambling, and ends up with nothing, they might feel worse off but are not truly out-of-pocket since the funds lost weren’t theirs from the outset.
Perhaps the hacker group should’ve continued focusing on hacking and consider hiring a portfolio manager for criminals. Still, these mistakes shed light on the current crypto landscape—showing that even seasoned attackers can falter under pressure.
Wash trading
There’s another angle to consider. While their trading skills may be lacking, they could also have been laundering stolen funds through these transactions, intentionally dumping compromised funds during the panic to buy back legitimate money, even at a loss.
As one commenter noted, “It’s a form of money laundering. While they’re selling off, on the other side, they are buying. Then they reverse after it rises. Lose the stolen money, profit on the clean money.”
The market correction on October 10 impacted traders across the board, catalyzed by a mix of macroeconomic pressures and declining liquidity in decentralized markets, leading to a $500 billion decline.
Although hacks and exploits are generally viewed separately, last week’s events highlight how on-chain markets, by design, apply the same principles universally: whether traders are retail, whales, or hackers.