“In order for individuals to use bridges to move their funds, assets are locked on one blockchain and unlocked, or minted, on another,” Symington said. “As a result, these services hold large volumes of cryptoassets.”
Harmony has not revealed how the heist occured. But, one investor had raised concerns about the security of its Horizon bridge as far back as April.
The security of the Horizon bridge hinged on a “multisig” wallet that required only two signatures to initiate transactions. Some researchers speculate the breach was the result of a “private key compromise,” where hackers obtained the password, or passwords, required to gain access to a crypto wallet.
The heist adds up to the plethora of negative news in the crypto market. Crypto lenders Celsius and Babel Finance halted withdrawals after a dramatic decline in the value of their assets which resulted in a liquidity crunch. On the other hand, beleaguered crypto hedge fund Three Arrows Capital could be set to default on a $660 million loan from brokerage firm Voyager Digital.
