A recent high-profile Bitcoin theft has been partly foiled, with the stolen funds unexpectedly returning to their original address.
The breach, one of the largest in recent memory, saw 4,064 Bitcoin—worth around $238 million—siphoned from a large wallet, only to be unshielded and sent back when hackers failed to secure privacy for the stolen assets.
The incident first came to light on August 19 when on-chain investigator ZachXBT identified a suspicious transfer involving a substantial amount of Bitcoin.
The theft targeted a Bitcoin whale, possibly a creditor of the now-bankrupt Genesis Trading, who had recently received over 600 Bitcoin from a bankruptcy distribution.
The stolen Bitcoin was rapidly split and moved across several platforms, including THORChain, KuCoin, and the Avalanche Bridge, in an attempt to obscure its origins.
The hackers employed a variety of sophisticated techniques, including the use of privacy protocols and mixing services, to further complicate the tracing of the funds.
However, when the hackers attempted to use the privacy protocol RAILGUN to shield Bitcoin, their efforts failed.
RAILGUN’s system did not allow the stolen funds to generate the necessary privacy proof, leading to the unshielding of the Bitcoin and its unexpected return to the original address.
The breach has sparked widespread concern within the crypto community, highlighting the persistent risks of holding large sums of digital assets and the ongoing vulnerabilities in crypto security measures.
