SecondFi Winds Down After $2.6M ADA Wallet Exploit

Cardano-based wallet SecondFi is preparing to shut down after a security breach exposed issues around wallet security and left hundreds of users awaiting recovery options.

SecondFi said it will wind down SecondFi and Yoroi wallet services after attackers stole about 16.1 million ADA, worth roughly $2.6 million, due to a cryptographic flaw in its wallet software, according to an update published on Wednesday.

The platform said an independent investigation by blockchain intelligence provider Groom Lake identified a sophisticated external actor behind the attack and found indicators potentially linked to North Korea’s Lazarus Group, although no attribution has been confirmed. It added that the breach affected 374 wallets.

The update came nearly a month after SecondFi first disclosed the exploit in late June, with affected users still waiting for recovery tools and migration options that the company says are now targeted for release in August.

SecondFi plans recovery tools as users await next steps

SecondFi said it is developing a recovery tool based on zero-knowledge proofs to help affected users recover assets while limiting the information they need to share.

The tool is still undergoing testing and will be reviewed by a third-party auditor before its planned release in August.

The platform is also preparing wallet export functionality that will allow users to migrate assets to another service. SecondFi did not announce a direct reimbursement plan or say whether it would compensate users from its own funds.

Users question recovery timeline as SecondFi winds down

SecondFi’s latest update has drawn frustration from some users who say they are still waiting for a clear path to recover or migrate their assets after the exploit.

Earlier guidance from the platform advised affected users not to restore recovery phrases into new Cardano wallets, saying that moving funds elsewhere “does not mitigate the risk” while SecondFi investigated the incident.

On June 27, SecondFi said it had identified a recovery path and expected to begin the process within about two weeks after completing testing and security reviews. Nearly a month later, the company said the recovery tool is still under development and is now expected to launch in August.

Related: Allbridge pauses cross-chain bridge after $1.65M exploit

“But many of us were told our funds could be recovered within two weeks. Now we’re being asked to wait even longer,” one user wrote in response to SecondFi’s Wednesday update.

Cointelegraph contacted SecondFi for details on potential reimbursement plans but did not receive a response by publication time. EMURGO also did not respond to earlier requests for comment.

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