Crypto Gambling Platform Lost More Than $40 Million in Unauthorized Transfers

The popular crypto-based online casino and gambling company Stake was hacked Monday for about $40 million in unauthorized online transfers.

Known by many for its partnership with rapper and entertainer Drake, Stake reported $16 million worth of withdrawals in Ethereum, Tether, USD Coin and DAI Monday morning, per Web3 security firm Cyvers. Crypto sleuth ZachXBT corroborated the report and also revealed another $25 million had been lost on Polygon and the Binance Smart Chain.

Despite the massive losses, Stake reopened for business less than five hours after the hack at around 5:30 p.m. ET.

The transfers were labeled as “suspicious” by Blockchain security firm Peckshield
 if not made under maintenance. Stake confirmed the transfers were unauthorized shortly thereafter, revealing there was a hack in the system.

“Three hours ago, unauthorised tx’s were made from Stake’s ETH/BSC hot wallets,” Staker said on X (formerly Twitter). “We are investigating and will get the wallets up as soon as they’re completely re-secured. User funds are safe.”

The hot wallets that were mentioned are applications connected to the internet that work as the interface for accessing and housing crypto funds.

The funds were transferred into Ethereum and disseminated to a variety of external wallets after they were stolen. Ethereum is a decentralized blockchain and the second-largest digital coin behind Bitcoin.

Stake founder Ed Craven said on X after the hack that the company kept a small portion of its crypto reserves in hot wallets at any given moment for these very reasons.” He also promised that any affected user wallets would be restored and made operational.

The receiving address of the hackers, as well as visual representations of hackers' transfers, have already been made public. Crypto security experts referred to the hacks as “methodical.”

Stake has quickly become one of the most popular online gambling sources, especially for crypto-based bettors. Users can engage in sports betting or tap into casino games and other forms of wagering.

The company launched in 2017 and went before the masses when it signed Drake to a $100 million partnership in 2022. Now, Drake often posts his bet slips from Stake on his social media, usually around marquee sports events and also hosts gambling streams where he uses Stake’s platform to throw down enormous wagers.

Financial Times reported that Stake made $2.6 billion in revenue in 2022, so it’s not as if it can ill-afford to lose the $40-odd million. However, it raises another question of security in the crypto world.

Over $3.7 billion was lost during online crypto attacks in 2022, the most in a single year. The number of breaches significantly fell during the first quarter of 2023, suggesting that companies had found safeguards against a variety of attacks.

Stake is considered a legal social casino and remains open for business for its customers despite the recent breach. Customers can play to win a variety of non-cash prizes in states excluding Washington, Idaho, New York, Nevada, and Kentucky.