Crypto Whale Loses $38M in Multisig Wallet Exploit

Blockchain security firm PeckShield first reported the incident on December 18, identifying an initial loss of about $27.3 million after a private key was exposed. Further on-chain tracking revealed the total damage climbed to approximately $38 million when related wallets and positions were accounted for. The attacker swiftly moved 4,100 ETH, worth about $12.6 million, through the privacy mixer Tornado Cash in an apparent effort to obscure the transaction trail, leaving around $2 million in remaining liquid assets.

More alarmingly, the attacker maintained control of the victim’s original address, which holds a significant leveraged long position on the DeFi lending platform Aave. On-chain data shows this position consists of roughly $25 million worth of Ethereum (ETH) supplied as collateral against more than $12 million in borrowed DAI stablecoin. This lingering control introduces substantial secondary risk, as market volatility could trigger forced liquidations, potentially deepening the victim’s financial losses.

On-chain analyst Specter provided a detailed timeline, revealing a fundamental flaw in the wallet’s configuration. The victim created a 1-of-1 multisig wallet, a setup that requires only one signature from a single signer to authorize transactions. This configuration completely negates the primary security benefit of a multisignature wallet, which is to mandate multiple independent approvals for any transaction, thereby distributing trust and control.

According to Specter’s analysis, less than 40 minutes after the victim transferred funds into this wallet, a massive outflow drained all tokens. Simultaneously, the wallet’s signer authority was switched to an attacker-controlled address. The most plausible explanations, as noted by Specter and later researcher tanuki42, are that the private key was leaked during the wallet setup process or that the victim relied on a malicious third party for assistance. A more sinister possibility raised is that the attacker may have created the multisig wallet themselves, leaving the victim exposed from the very beginning.

This incident is not an isolated failure but fits into a persistent pattern of private key theft and social engineering plaguing the cryptocurrency sector. In a December 15 report, the cybersecurity group Security Alliance warned that hackers linked to North Korea (PRK) are conducting daily fake Zoom and Teams calls designed to plant malware and steal private keys—a method responsible for hundreds of millions of dollars in losses.

This shift in tactics was echoed by Binance founder Changpeng Zhao in a September warning. He noted that attackers are increasingly targeting human trust rather than technical smart contract flaws, often by posing as helpful community members, job candidates, or meeting hosts. The victim in this case, whose on-chain history shows months of activity including a large ETH withdrawal from exchange OKX and staking via Kiln Finance in May, ultimately fell prey to this human-centric attack vector.

The $38 million multisig exploit serves as a harsh, real-world lesson in crypto security fundamentals. It underscores that sophisticated technology like multisig wallets provides no protection if implemented incorrectly or compromised through basic oversights in private key handling. As the attacker continues to hold the keys to a multimillion-dollar DeFi position, the financial and educational ramifications of this breach are still unfolding.