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Blockchain, cryptocurrencies, and insider stories by TNW.

Fusion’s $6.4M cryptocurrency theft could be an inside job, firm says

13.5 million FSN tokens were stolen from the firm's operational wallet

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Thieves have ransacked the Fusion Protocol, a blockchain-powered platform for exchanging “stablecoins” and other tokens, stealing roughly $6.4 million worth of cryptocurrency.

“[On] September 28th 2019, the Fusion swap wallet was compromised, resulting in theft of 10 million native FSN and 3.5 million ERC20 FSN token,” reads a Fusion Foundation blog dated September 29.

The post then confirms the platform’s own wallet was the only one affected, as the firm had received no reports of compromised user wallets.

Cryptocurrency traders reacted immediately to a prior announcement in the firm’s Telegram channel. The value of FSN halved, dropping from around $0.50 to below $0.25 over a seven-hour period.

Later investigations revealed abnormal “wash-trading” behavior, and discovered the perp(s) had sold some of the stolen funds on obscure exchanges Bitmax and Hotbit.

Cryptocurrency exchanges OKEx, Huobi, Citex, Bitmax, and Hotbit have since suspended deposits and withdrawals of FSN tokens.

Curiously, the firm suspects this was an inside job. The announcement noted the private key of Fusion’s wallet had been stolen, and that the technology powering the platform “remains secure.”

“The Foundation deeply regrets this incident and its impact on the path of Fusion’s innovation,” said the firm. “While private key theft is an industry-wide risk and occurrence, we clearly must strengthen the protection around our private keys.”

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Published September 30, 2019 — 12:09 UTC