Explainer: Ronin's $615 million crypto heist

Creative Realities

30/03/2022 14:28

By Tom Wilson and Elizabeth Howcroft
    LONDON, March 30 (Reuters) - Hackers have stolen
cryptocurrency worth almost $615 million from a blockchain
project linked to popular online game Axie Infinity, the latest
cyberheist to hit the digital asset sector.
    Ronin, a blockchain network that lets users transfer crypto
in and out of the game, said on Tuesday the theft happened on
March 23 but was not detected until almost a week later.
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    Here's what you need to know about the Ronin heist.
    
    CRYPTO'S A BIG DEAL NOW, RIGHT?
    Indeed. 
    Bitcoin and other digital currencies have exploded into
public view in recent years, with mainstream investors embracing
the sector in droves during the COVID-19 pandemic. 
    The sector's now worth over $2.1 trillion. As money has
poured in, the hacks and heists that have long plagued crypto
have also grown also size.  urn:newsml:reuters.com:*:nL3N2VX6K5
    
    AND HOW DOES RONIN FIT IN?
    Ronin is used in Axie Infinity, one of the world's most
popular online games involving cryptocurrencies. 
    Its products include a digital wallet for storing crypto,
and a "bridge" that allows users to move funds in and out of the
game. This is where the crypto were stolen from. 
    Ronin takes its name from the samurai warriors of feudal
Japan who did not serve any particular lord. The name
"represents our desire to take the destiny of our product into
our own hands," Axie Infinity said in a blog post.
    Vietnam-based Sky Mavis, which launched Axie Infinity in
2018, did not respond to multiple requests for comment. Ronin
also did not return Reuters' messages.
    Jeffrey Zirlin, one of Axie Infinity's founders, said at a
conference on Tuesday: "It is one of the bigger hacks in history
and we're fully committed to continue building."
    
    HOW DID THE HEIST HAPPEN? 
    The Ronin hacker used stolen private keys - the passwords
needed to access crypto funds - Ronin said in a blog post, after
targeting computers connected to its network that help confirm
transactions. 
    Ronin said it discovered the hack on Tuesday and that it was
working with "various government agencies to ensure the
criminals get brought to justice". 
    The identity of the hackers is still unclear. 
                
    AND AXIE INFINITY?  
    Axie Infinity says it has 2.8 million daily active players,
with some $3.6 billion previously traded on its marketplace,
making it one of the most popular blockchain-based online games.
    Set in a fictional universe, players can collect, trade and
play with virtual creatures called Axies, which are traded in
the form of non-fungible tokens (NFTs) and sell for hundreds of
thousands of dollars. 
    It is the largest NFT brand by all-time sales volume,
according to market tracker CryptoSlam.
    The game has attracted venture capital funding, raising $152
million in October from investors including Andreessen Horowitz.
    Axie and other "play-to-earn" games allow players to spend
crypto and earn financial rewards. They have surged in
popularity in the past year, as a frenzy in the NFT world
prompted investors to speculate in the hope of large returns.
    
    WHERE'S THE LOOT NOW? AND ARE USERS AFFECTED? 
    Most of the stolen funds are still in a digital wallet,
which is available to view. 
    Blockchain Intelligence Group, a Vancouver-based crypto
tracker, said that the hackers had moved a small amount of the
funds to major exchanges FTX, Crypto.com and Huobi. 
    Huobi said it was investigating the hack and communicating
closely with Axie Infinity. FTX and Crypto.com did not
immediately responded to requests for comment.
    Ronin said in a blogpost that Sky Mavis was "committed to
ensuring that all of the drained funds are recovered or
reimbursed," without giving details. Making sure there is no
loss of funds "is our top priority", it added.
    It said it was working with major blockchain tracker
Chainalysis to trace the stolen funds. Chainalysis declined to
comment.      

 (Reporting by Tom Wilson; Editing by Kirsten Donovan)
 ((T.Wilson@thomsonreuters.com; (44) 20 7513 5676; Reuters
Messaging: t.wilson.thomsonreuters.com@reuters.net))