TL;DR
- LCX hack of almost $8 Million USD in January 2022
- Now approx. 60% of stolen funds frozen
- Investigation and international collaboration with law enforcement in Liechtenstein, Ireland, Spain and USA
- Successful tracking stolen funds laundered by Tornado Cash crypto mixer, hacker wallets identified
- 500 ETH are frozen due to a Liechtenstein court order served by law enforcement in Ireland to Coinbase Europe
- 1.3 Million USDC are frozen by Centre Consortium based on a US court order from the Supreme Court of New York
- First time in history and important for Legal and Crypto Industry as a whole: a temporary restraining order (TRO) to a defendant had been served via NFT
LCX is a regulated fintech company that focuses on digital asset trading, compliant token offerings and tokenization. LCX received 8 blockchain related approvals by the Liechtenstein regulator, more than any other company in the country.
LCX.com offers a centralized crypto exchange, a powerful DEX aggregator, the Liechtenstein Protocol for security token infrastructure and Tiamonds.com, the leading NFT marketplace for real-world diamonds as asset-backed NFTs.
In January 2022 LCX suffered a hack where almost $8 Million USD worth of cryptocurrencies had been stolen from one of LCX’s hot wallets. All other LCX hot wallets and confidential customer data had not been affected and had not been involved in this security incident.
Since then LCX’s management and legal team had been continuously working with law enforcement, police, public prosecutors and blockchain tracing specialists to recover the stolen funds and identify the hacker. LCX engaged with law enforcement in Liechtenstein, Ireland, Spain and the United States of America.
This illustrates how regulated blockchain companies, like LCX.com, are establishing a next generation of digital asset exchanges maturing the whole cryptocurrency industry.
Note: This article is an informal update on recent happenings for our LCX community. It is not a complete report, as some information are strictly confidential or are not allowed to be published.
Tracing of Stolen Funds
Several tracing reports analyzing the transactions of the stolen digital assets had been prepared. LCX’s specialists conducted an algorithmic forensic analysis and tracing of the stolen assets through the crypto mixer Tornado Cash. Tornado Cash is a mixer protocol to hide the digital trail of blockchain transactions often used for money laundering and laundering of hacked funds.
As a result LCX was able to identify the current location of the stolen funds and the wallets operated by the alleged criminal.
The main hacker wallet addresses are
0x29875bd49350ac3f2ca5ceeb1c1701708c795ff3
and
0x5C41b35DD45E951222C5e61a34FDF0A3Bd53Ed72
The alleged thief or group of criminals sent 500 ETH to a fully verified user account at Coinbase. And recently swapped ETH to USDC on decentralized exchanges. U.S. Dollar Coin (USDC) is issued by Circle (Circle Financial Services) while Centre Consortium is operating the technology and is able to blacklist wallets, ultimately freezing USDC tokens in particular wallets.
IMPORTANT NOTE: All hacker wallets will be now reported, marked and flagged at Elliptic and other blockchain analytics companies, as well as at Etherscan and other public crypto explorers. And most importantly our outstanding LCX community will keep monitoring the stolen funds on-chain.
Funds Frozen at Coinbase
One transaction by the hacker was made to a verified user account at Coinbase Europe, a regulated entity in Ireland. To freeze these funds and get details about the potential perpetrator LCX’s team worked closely with the Police in Ireland, the Police in Liechtenstein and the public prosecutors of both jurisdictions. A court order by the Liechtenstein law enforcement was sent to Ireland and funds had been frozen by Coinbase immediately.
A total of 500 ETH are frozen at this centralized exchange at the moment. Additional investigation to identify the hacker is on-going and a legal process to return the funds to LCX has been started.
USDC Frozen by Centre Consortium
LCX’s lawyers filed a complaint on June 1st 2022 the New York Supreme Court, USA, outlining details about the security incident and the stolen digital assets. The complaint was filed against John Doe: John Doe are placeholder names that are used when the true name of a person is unknown or is being intentionally concealed.
The New York Supreme Court ordered to blacklist the hacker wallet, ultimately freezing 1,274,249 $USDC. The Centre Consortium followed suit and blacklisted the hacker wallet on-chain.
Transaction USDC Blacklisting 0x8cc0c781c03a1b4d943450fb3b44eaf6742fe37b05291968aff7374f0e060c68
and
https://etherscan.io/tx/0x8cc0c781c03a1b4d943450fb3b44eaf6742fe37b05291968aff7374f0e060c68#eventlog
Enacted June 2 @ 10:36 PM (UTC)
First Time Ever: Legal Process Served by NFT On-Chain
LCX’s lawyers Holland & Knight and Bluestone, P.C., achieved a historic first that has major repercussions for the cryptocurrency markets. They successfully served a temporary restraining order (TRO) to a defendant in a hacking case via NFT, which they are calling a “service token” or “service NFT”. This innovative method of serving an anonymous defendant was approved by the New York Supreme Court and is an example of how innovation can provide legitimacy and transparency to a market that some believe is ungovernable.
The on-chain process served via the innovative “Service NFT” can be publicly found on the Ethereum blockchain https://etherscan.io/nft/0xdc9ec0c966c3d3a552a228b3fe353848ce2f25f4/1
The link of the “Service NFT” leads to legal documents including the TRO at https://www.hklaw.com/en/general-pages/lcx-ag-v-doe
