Phemex reassures users with a compensation plan after $37 million hot wallet breach

Singapore-based crypto exchange Phemex has temporarily suspended withdrawals following a reported $37 million exploit targeting one of its hot wallets.

On Jan. 23, the exchange announced this decision to allow for an emergency inspection and to enhance its wallet security measures. Phemex assured users that withdrawals would resume soon and apologized for the inconvenience.

Cyvers, a blockchain security firm, first detected the breach. The firm initially flagged the unusual transfers of $29 million from Phemex’s hot wallets across various blockchains, including Ethereum, Binance Smart Chain, Polygon, Optimism, Base, and Arbitrum.

Cyvers later confirmed that Bitcoin and Tron-based assets were also impacted, bringing the total losses to approximately $37 million. The attackers swiftly began swapping the stolen tokens into Ethereum to evade detection and freezing.

Meir Dolev, Co-Founder and CTO of Cyvers shared additional details with CryptoSlate, revealing over 125 suspicious transactions involving fund transfers from Phemex’s hot wallets to new wallets on various networks.

The affected tokens and stablecoins were reportedly swapped across Ethereum, Binance Smart Chain, Avalanche, Solana, and others.

Compensation plan

Phemex CEO Federico Variola reassured users that the exchange’s cold wallets, which house the majority of funds, remain secure and verifiable.

He stated that the platform continues to operate its trading services as usual and will provide updates as the investigation unfolds.

The company is also developing a compensation plan for affected users, with further details expected soon.

According to the exchange:

“Phemex and the development team apologize for the disruption. Our mission to provide a seamless and trusted trading environment remains firm. We are working on a compensation plan, which will be announced soon. Thank you for your understanding and continued support.”

Phemex is one of the leading crypto exchange platforms in Singapore. According to CoinMarketCap data, it recorded trading volumes exceeding $170 million in the past 24 hours and holds $442 million in user assets.

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