Japanese crypto exchange firm Liquid has lost nearly $100 million in cryptoassets following a sophisticated cyber heist.

In an announcement yesterday, the crypto exchange confirmed the hack, revealing that some of its ‘warm wallets’ had been compromised.

“We are sorry to announce that LiquidGlobal warm wallets were compromised, we are moving assets into the cold wallet,” Liquid confirmed on Twitter.

Liquid is one of the world’s largest cryptocurrency exchanges, serving millions of customers from over 100 countries.

Just over $97 million in cryptoassets have been stolen in the attack, according to analysis by cryptocurrency firm, Elliptic.

This includes $45m in Ethereum tokens, the firm noted – a significant portion of which has been converted into Ether using a host of decentralised exchanges.

“This enables the hacker to avoid having these assets frozen – as is possible with many Ethereum tokens,” Elliptic explained in a statement.

Important Notice:
We are sorry to announce that #LiquidGlobal warm wallets were compromised, we are moving assets into the cold wallet.

We are currently investigating and will provide regular updates. In the meantime deposits and withdrawals will be suspended.

— Liquid Global Official (@Liquid_Global) August 19, 2021

In a blog post, Liquid revealed its security team is still “assessing the attack vector used” and taking measures to mitigate the impact to users. This includes suspending deposits and withdrawals.

The firm is working closely with other crypto exchanges to trace and freeze assets that may have been stolen in the attack.

“During this difficult period we greatly appreciate the support from our customers, other exchanges, security experts, and the broader crypto community,” the company said.

“Liquid will continue to do everything in its power to mitigate the impact from this incident and restore full service as soon as possible.”

Warm wallets vs cold wallets – what’s the difference?

‘Warm’ crypto wallets are those based online and enable crypto investors to access their funds via digital platforms.

Conversely, cold wallets are offline-based, meaning they are harder for would-be attackers to gain access to.

According to CoinMarketCap, cold wallets are widely regarded as a more secure storage solution as they aren’t connected to the internet.

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This latest attack marks the second major crypto heist this month, with Poly Networks losing around $600 million in cryptocurrency last week.

As the Poly Network incident unfolded, it was revealed that the individual responsible for the breach was a ‘white hat hacker’ who exploited Poly Network vulnerabilities “for fun”.

The hacker behind the attack has returned a significant portion of the stolen assets after Poly Network offered to pay a ‘bug bounty’ for their efforts.

James McQuiggan, security awareness advocate at KnowBe4, said the Liquid attack marks another concerning development for crypto exchanges and users.

“Unfortunately, with another cryptocurrency exchange successfully attacked for the second time this week, this can only be a sign of things on the horizon for these exchange companies,” he warned.

“Cybercriminals continue to target systems and networks where the money is stored. If it is digital, it can be hacked,” McQuiggan added.