In a significant setback for the crypto industry, Phemex experienced a large-scale security breach on Thursday. Reports indicate that millions in various cryptocurrencies, including USDT, USDC, and Ethereum (ETH), were siphoned from the exchange’s hot wallets, leading to a temporary cessation of withdrawals.
This incident marks the first major exchange hack of 2025, as suspicious activities were detected across Phemex's hot wallets on multiple blockchain networks. Blockchain security expert Cyvvers reported several suspicious transaction flows to different wallets across chains like BNB, ETH, and BASE, initially estimating a loss of over $29 million. Further analysis by Cyvvers later expanded this figure to approximately $37 million, highlighting impacts on BTC and TRON blockchains.
Cyvvers identified around 125 dubious transactions and noted that stolen tokens were being converted to Ethereum (ETH) to evade potential asset freezing. On-chain data firm Lookonchain detailed the scale of the hack, calculating around $31 million in losses, including 3.48 million USDC, 3.42 million USDT, and 841 ETH.
Additional stolen assets included significant quantities of LINK, PEPE, FET, and AVAX, totaling approximately $7.3 million. Other impacted currencies listed by Lookonchain encompass ONDO, TRX, CRV, and several others.
Following the breach, Phemex CEO Federico Variola acknowledged the security compromise of one of their hot wallets, while assuring customers that the cold wallets remained secure. The exchange implemented an emergency halt on withdrawals for inspection and to bolster security protocols, promising a quick resolution and apologizing for the disruption.
Normal trading operations continued unaffected, and Phemex disclosed its intent to devise a compensation plan, details of which will be forthcoming.
The exploit comes in the wake of a concerning trend, as 2024 saw a notable rise in crypto-related hacks. Chainalysis reported that funds lost to hacks surpassed $1 billion for a fourth consecutive year, with last year's total reaching $2.2 billion amid 303 incidents.
Centralized exchanges bore the brunt of major security breaches, especially in Q2 and Q3, while Decentralized finance (DeFi) platforms consistently accounted for the largest proportion of stolen assets from 2021 to 2023.
This incident underscores the ongoing security challenges facing the crypto industry as exchanges look to fortify defenses against increasingly sophisticated attack vectors.