Arthur Cheong, the founder of renowned web3 and Defi capital firm DeFiance capital, has lost NFTs worth 1.6 million in an NFT scam on Tuesday.
Defiance Capital Founder Loses NFTs Worth $1.7 Million
Arthur Cheong, the founder of Defi and crypto gaming firm DeFiance Capital took to Twitter to share his statement reporting that his crypto wallet has been subjected to an online phishing scam.
“Well not sure what happened, need to take time to figure it out. Didn’t expect this to happen to me as well. Guess no more hot wallet usage then.” Cheong tweeted on Tuesday.
Hot wallets are often categorized as “vulnerable crypto wallets” since they are connected to the internet. This makes it easier for hackers to steal confidential information such as crypto wallet keys and crypto-asset information.
According to security and analytics firm Peckshield, the stolen NFTs include 17 Azukis, 5 CloneXs, 2 Hedgies, and 33 Second Selfs. It was reported that the hacker stole all these assets from Cheong’s wallet and later sold them on OpenSea. The hacker also made further transactions including transferring other tokens such as tokens 68 wrapped Ether (wETH), 4,349 staked DYDX (stkDYDX), and 1,578 LooksRare (LOOKS) tokens.
Moreover, Cheong said that the hacker made use of a spear-phishing email hack, a popular fraudulent practice that includes sending emails from a known address to target people.
“Found out the likely root cause for the exploit; it’s a targeted social engineering attack. Received a spear-phishing email that seems to be sent by one of portco with content that seems like general industry-relevant content.” Cheong later added.
However, the crypto community came forward to support Cheong and assist him in retrieving his stolen assets. The DeFiance capital founder urged people to blacklist the hacker’s wallet and stop him from moving the assets from one place to the other.
Cheong’s online hack has managed to raise questions on crypto wallet security highlighting that wallets holding crypto assets need to be more robust and powerful to thwart any unidentified third-party intervention.
“Well, this hit me hard but if I got exploited as a fairly sophisticated 5 years crypto user (DeFi user, password manager, mostly hardware wallet), I’m not sure how I can person-chaint normal people to put a substantial part of their net worth on chain anymore,” Cheong later added.