Cryptocurrency payment platform Alphapo was hacked earlier this month, losing tens of millions of dollars’ worth of various cryptocurrency tokens.
The hack, which saw more than $31 million in digital assets stolen, has had a significant impact on several online gambling platforms that relied on Alphapo for their cryptocurrency transactions.
That includes widely known, U.S.-focused crypto sportsbook and casino operators like Bovada and Ignition.
The hack was so extensive that reports have not confirmed exactly how much was stolen, with some outlets suggesting as much as $100 million may have been lost.
It also comes at a time of rising cybercrimes against cryptocurrency traders and online casinos. Last week, we reported on a new study showing the increasing frequency of Distributed Denial of Service attacks against both sectors.
HypeDrop, a clothing and entertainment mystery box seller, is the only company to comment on how it has been affected so far.
The Hack and Its Immediate Aftermath
What we do know is that on July 23, hackers managed to breach the security of Alphapo’s hot wallets, making off with a significant amount of bitcoin, ethereum, and TRON.
The exact number of stolen bitcoin tokens remains uncertain, which suggests that the total amount stolen could be even higher than the $31 million figures reported. The hackers reportedly gained access to the funds through a leak of private keys.
Following the breach, the hackers converted the stolen funds into ethereum, and then routed these funds through Avalanche and bitcoin, making it difficult for investigators to trace the transaction history.
Alphapo, which allows for quick transactions in more than 30 digital assets and a wide variety of fiat currencies, serves as the cryptocurrency middle-man for several gambling platforms, including HypeDrop, Ignition, and Bovada.
Impact on Cryptocurrency Casinos
The hack has had a significant impact on these platforms. HypeDrop, one of Alphapo’s major clients, immediately ceased processing all crypto transactions following the security incident.
The company highlighted to its users the continued challenges with BTC, ETH, and TRON withdrawals, in addition to ETH and TRX deposits.
HypeDrop is actively working with its provider to remedy the difficulties and return operations to normalcy. It assured its customers about the safety of its funds. However, the incident has undoubtedly shaken the trust of many users and highlighted some of the vulnerabilities with cryptocurrency-based businesses.
Long-Term Implications for the Industry
The Alphapo hack has revived security concerns within the cryptocurrency industry and serves as a stark reminder of the ever-present possibility of disastrous crypto attacks.
As cryptocurrency becomes more popular, more hackers are targeting payment processors and exchanges to exploit system vulnerabilities.
This incident could also shape the adversarial attitude of regulatory organizations towards crypto payment processors and exchanges.
The industry is already reeling after the collapse and subsequent criminal investigation into popular trading platform FTX.
That event had ramifications for the U.S. sports betting sector. FTX was a keen and major investor in PlayUp, an Australian operator attempting to break into the U.S market.
However, the crypto exchange’s downfall and the subsequent loss of investment paused PlayUp’s U.S. expansion. Eventually, the lack of funds was a key factor in last week’s decision to suspend the business’ operations in its two legal markets.