Poloniex’s $126M Security Breach Triggers FCA Warning

The Financial Conduct Authority (FCA) of the United Kingdom has recently issued a stark warning regarding the crypto exchange Poloniex. Owned by entrepreneur Justin Sun, Poloniex is under scrutiny after suffering a significant security breach, resulting in a loss of $126 million. The FCA’s warning, highlighted on their website on December 6, draws attention to Poloniex operating without authorization in the UK, a situation raising eyebrows within the financial community.

Repeated Security Breaches Raise the Alarm

Poloniex, a Seychelles-based exchange, is one of many Sun-affiliated platforms that face security challenges. In the past two months, Sun’s associated firms have experienced four significant hacks, causing concern across the cryptocurrency sector. 

These incidents include an $8 million loss at HTX in September and a $30 million hit from a hot wallet breach in late November. These repeated security breaches underscore the vulnerabilities present in the digital asset space.

Poloniex’s Restoration Efforts and Future Plans

Following the substantial hack on November 10, Poloniex has been actively working on restoring its platform. By the end of November, they had primarily completed these efforts and were preparing to resume deposits and withdrawals. As of December 5, Poloniex reinstated these services for selected cryptocurrencies through the Tron network, suggesting a phased approach to full operational capacity. This move signifies a step towards normalcy, yet the shadow of recent events lingers.

The FCA’s decision to add Poloniex to its warning list amidst a broader regulatory crackdown on unauthorized financial services in the UK. Since 2020, the FCA has received 291 applications from crypto companies for registration, approving only 38. 

Including 140 crypto companies, including HTX and KuCoin, on its warning list in October reflects a tightening regulatory landscape. Amid these developments, Poloniex’s recent woes stand as a reminder of the importance of stringent security measures and regulatory compliance in the ever-evolving world of cryptocurrency.

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