Mixin Network’s $200M Hack Sparks Controversy: Users to Receive Partial Compensation”

The Breach and Immediate Fallout”

Mixin Network, a decentralized cross-chain transfer protocol based in Hong Kong, finds itself embroiled in controversy following the revelation of a $200 million hack. Xiaodong Feng, the founder of Mixin, has responded by outlining a compensation plan, albeit one that promises to reimburse users for only up to 50% of their assets at this time.

The Breach and Immediate Fallout”

The breach occurred on September 23 when hackers infiltrated the database of Mixin’s cloud service provider. The attack led to the loss of $200 million in assets on Mixin’s mainnet. In response, the protocol swiftly suspended deposit and withdrawal services. Notably, developers have assured users that regular transfers remain unaffected as the investigation progresses.

Questions Surrounding Mixin’s Bitcoin Holdings

In a September 25 post, Zhuoer Jiang, CEO of the Bitcoin mining pool BTC.TOP, raised questions about the security breach. He argued that the Bitcoin stored within Mixin’s protocol, valued at $26,239, should have been impervious to theft. Typically held in cold storage, these Bitcoins should have remained secure even when Mixin’s hot wallets on the cloud server were compromised. Mixin had publicly disclosed its holdings of 9,544 BTC, approximately worth $253 million, during its last monthly report in July.

Founder’s Response and Compensation Plan

During a live briefing on the same day, Mixin’s founder, Xiaodong Feng, acknowledged that the stolen Bitcoins were the core assets affected. He pledged to compensate users for their losses, capping the reimbursement at a maximum of 50%. Additionally, Feng stated that the remaining amount would be distributed to users as “tokenized liability claims,” with Mixin committing to repurchase them using its future profits.

Mixin’s Journey and Prominent Investors

Founded in 2017, Mixin boasted nearly $400 million across 48 different chains locked within its protocol before the incident. This information comes from DefiLlama, an aggregator of decentralized finance data. Mixin’s protocol is designed to enable users to send digital assets to others using phone numbers as identifiers. Notably, Xiaolai Li, a prominent Chinese billionaire and early Bitcoin enthusiast, is among the earliest angel investors in the company.

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