In November 2023, a significant portion of the $100 million worth of Ethereum stolen from Poloniex was seized through the Tornado Cash privacy protocol. The crypto exchange experienced unauthorized withdrawals of over $100 million worth of Ethereum, which was later confirmed as a hack.

The Aftermath of the Poloniex Hack

Despite the hacker's claim of identifying the culprit and offering a $10 million reward, the stolen funds never returned to Poloniex. Blockchain security firm CertiK suggested that the incident was likely due to a private key compromise. In response, Poloniex temporarily disabled the compromised wallet.

Six months later, it became clear that the hacker had no intention of returning the stolen money. Blockchain research firm PeckShield discovered that more than half of the stolen funds were transferred to Tornado Cash, a protocol used to anonymize assets. The hacker moved over 17,800 Ethereum from six different wallets to a single Tornado Cash address, valued at approximately $53.3 million at the time of transfer.

Poloniex's Proactive Measures

Poloniex resumed operations shortly after the $100 million disruption, allowing investors to deposit and withdraw cryptocurrencies at any time. The exchange appointed a top-tier security audit firm to enhance the security of funds on Poloniex and prevent such attacks in the future. They shared a statement expressing their commitment to completing the security auditing and verification processes before fully resuming deposit and withdrawal services.

Justin Sun, the owner of Poloniex, assured that the exchange maintained a healthy financial status and was seeking cooperation with other exchanges to recover the lost funds. He promised full compensation to users affected by the breach, demonstrating Poloniex's dedication to protecting its customers.