SOL Slumps as Solana Wallets Hit in Multimillion Dollar Heist

Key Points

• Over 8,000 Solana wallets have seen at least $8 million in funds drained in the latest major crypto hack.
• SOL was hit on the news and is underperforming its major cryptocurrency peers on Wednesday.
• However, SOL continues to hold above its 50DMA and uptrend support for now.

Solana Wallets Hit in Multimillion Dollar Hack

Late on Tuesday, the Solana blockchain’s crypto ecosystem came under attack. As of early Wednesday morning, at least $8 million worth of crypto has been drained from more than 8,000 different “hot” wallets, including Phantom, Slope and TrustWallet. “Hot” wallets are those that stay connected to the internet at all times to provide users with convenience when sending, receiving or storing digital assets.

Twitter users speculated that the hackers might have access to users’ private keys, thus giving them wallet access.

$SOL hack

Over $8 million in funds drained across 8000 Solana-based hot wallets, including Phantom, Slope and TrustWallet.

Apparently hackers have access to users’ private keys…

Move your funds to a cold wallet ASAP + cancel all permissions.

Will keep you updated.

— NewsCrypto.io (@NwcPublic) August 3, 2022

But the exact cause of the attack remains unknown. Some crypto commentators speculated that a trusted third-party service may have been exploited in a “supply chain attack” The hacker was also reportedly targetting wallets that had been inactive for more than six months and had formerly used a now inactive “auto-approve” feature.

A spokesperson from Phantom, the developer of the most widely used Solana wallet, told the crypto media that “we are evaluating the incident impacting Solana wallets and are working closely with other teams in the ecosystem to get to the bottom of this”. “The team doesn’t believe this is a Phantom-specific issue at this time,” they added.

Solana Users Urged to Shift Holdings to Cold Storage

Prominent crypto community members urged Solana users to send their hot wallet holdings to a hardware wallet to shield themselves from attack. Hardware wallets sometimes referred to as cold wallets or cold storage, must be physically connected to a computer in order to sign off on crypto transactions. They are seen as more secure than hot wallets.

Some sort of HUGE ecosystem hack going on across #Solana $sol right now!

Shit tons of wallets being drained.

If you are using a hot wallet like Phantom then consider sending funds to your hardware wallet or even to an exchange account until we find out what is going on!

— Lark Davis (@TheCryptoLark) August 3, 2022

The Solana exploit is the latest in a string of major crypto hacks. Earlier this week, $190 million in funds was stolen using an exploit in the cross-chain token bridge Nomad. Earlier this year, Axie Infinity Ronin exploit saw users lose nearly $600 million in funds.

SOL Slumps on Wallet Hack News

SOL, the native token that powers the Solana ecosystem, has taken a hit on the news of the hack. SOL/USD was last trading lower by just over 3.0% on Wednesday in the mid-$38.00s per token and is down over 4.5% in the last 24 hours, according to CoinMarketCap. That compares to most other major cryptocurrencies, like BTC, ETH, BNB and ADA which are trading 1-5% higher in the last 24 hours.

SOL weakness may reflect concerns that the hack may impact the Solana ecosystems growth going forward, with crypto users perhaps choosing an ecosystem that they deem “safer”. Indeed, Solana has been beset by multiple network outages in recent months.

Various members of the Cardano community cited the Solana hack as the latest example of why Input Output Global’s (Cardano’s developer) slower, more measured approach to blockchain development is safer.

For the IOG team, the priority has always been the decentralization and security of #Cardano. Scalability can be improved on these foundations. The #Solana team preferred speed over security. The wallet hack is the result. $ADA $SOL

— Cardanians.io 🏊 CRDNS pool (@Cardanians_io) August 3, 2022

SOL Eyes Test of Key Uptrend Support

Despite the news of the hack, the slightly better tone to broader cryptocurrency market conditions is keeping SOL above its 50-Day Moving Average in the mid-$37.00s for now. Technicians are also eyeing a potential test of an uptrend that has been supporting the price action since mid-June. So long as SOL can stay above this uptrend, it arguably still has a modestly positive near-term technical bias.