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Another setback for Solana as users lose $8 million in assets following the latest exploit

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(Kitco News) - The beleaguered cryptocurrency market is facing another test of resilience after a new exploit on the Solana blockchain has seen more than $8 million in funds drained from users' wallets in the last two days.

Beginning late Tuesday, the exploit mainly targeted the Phantom and Slope wallets, two of the popular hot wallet options in the Solana ecosystem.

According to the Twitter account Solana Status, which has been providing updates on the situation, "approximately 7,767 wallets" have been drained by the attack and should now be considered "compromised, and abandoned."

The vast majority of stolen funds were exfiltrated during a 10-minute window on Aug. 2 in which $6 million worth of tokens were drained from user wallets.

Multiple security analysts and Solana co-founder Anatoly Yakovenko have speculated that this was a supply chain attack that allowed hackers to gain access to private keys.

Digging deeper into the data, Yakovenko noted that "Multiple plausible wallets that only received SOL and had no interactions beyond receiving have been affected." It also appears as though a majority of the compromised wallets had their private keys imported or generated on iOS and Android devices. According to Yakovenko, "All the confirmed stories so far have had the key imported or generated on mobile."

Rather than clean out the entire balance of a wallet which would have taken more time, the unknown attacker(s) focused their attention on the native SOL token as well as the stablecoin USD Coin (USDC).

As the attack unfolded, the price of Solana dipped 11.78% from a daily high of $42.46 on Aug. 2 to a low of $37.44 in the early hours on Aug. 3, but has since climbed back above support at $40.00.

SOL/USDT 4-hour chart. Source: TradingView

Crypto market setbacks

This latest exploit is the most recent in a series of setbacks for Solana and the cryptocurrency ecosystem as a whole.

Over the past year, the Solana network has experienced a total of seven outages that saw the blockchain come to a complete halt for an extended period of time, with the most recent occurring on June 1.

Looking at the macro picture, 2022 has been especially challenging for the cryptocurrency market which has been rocked by a series of high-profile collapses. From the implosion of Terra and its TerraUSD (UST) stablecoin to the collapse of multiple crypto firms including Three Arrows Capital, Voyager and Celsius, the crypto market has faced one challenge after another over the past 7 months.

On top of the ongoing Solana saga, the ecosystem also experienced its fourth largest hack in history on Aug. 1 when the Nomad token bridge was compromised resulting in the loss of nearly $200 million worth of funds.

Despite these setbacks, the overall crypto market is showing increased resiliency as the total cryptocurrency market cap has held above $1 trillion while Bitcoin has maintained support above $23,000.

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