‘Axie Infinity’ publisher raises funds to reimburse users after $625 million hack
By Jon Sarlin, CNN Business
Sky Mavis, makers of the crypto “play-to-earn” game “Axie Infinity,” announced on Wednesday it had raised a $150 million investment. The news comes on the heels of recent and widely-publicized hack of the company in which around $625 million in assets were stolen.
The company says the additional money will allow users to withdraw their funds, which have been unavailable since the hack. The cash infusion is led by Binance with participation from venture capital firms Animoca Brands, Dialectic, Paradigm, Accel and blue chip VC firm a16z, which has previously invested in the company.
Kalie Moore, a spokesperson for Sky Mavis, told CNN that $400 million was stolen from users, while the rest was taken from the company’s treasury. The cash infusion combined with Sky Mavis’ existing funds will be used to make users whole, she said, while the company’s treasury will remain “undercollateralized” while the company works with law enforcement.
If within two years the funds are not recovered, the company’s DAO (decentralized autonomous organization) will vote on “the next steps for the treasury,” said Moore.
According to the company, the Ronin Network — Sky Mavis’ proprietary trading network — will re-open after security upgrades and audits, which could take “several weeks.”
Sky Mavis hack
Axie Infinity is one of the most popular “play-to-earn” games, a genre in which players can earn crypto tokens. The game resembles Pokemon, with cartoon creatures called “Axies” that players can collect and use to battle each other. The company’s last valuation pegged it at worth nearly $3 billion.
The game’s Ronin Network suffered the hack on March 23, but Sky Mavis says it only discovered what happened a week later.
The company announced the hack last week on stage at the NFT LA conference, with Sky Mavis’ co-founder Jeff “Jiho” Zirlin telling the crowd that “The Ronin network [had] been exploited for 173,000 [Ethereum] and around 25 million dollars in USDC.” USDC is a so-called stablecoin whose value is pegged to the US dollar.
The breach is one of the largest known crypto hacks. Last year, an anonymous hacker stole roughly $600 million in cryptocurrency from Poly Network, a decentralized finance network, in what was called the largest crypto heist in history. The hacker later gave it back.
In an exclusive interview after the hack, Zirlin told CNN that he could not commit to a timeline to reimburse users, saying, “There’s no guarantees in crypto…but we’ll do our best to figure it out.”
Questions surrounding Binance
Binance’s cash infusion into Sky Mavis comes at a precipitous time for the crypto giant.
Binance is the world’s largest cryptocurrency exchange, although its core trading platform is prohibited from operating within the United States. Acting as both crypto exchange and crypto venture capital fund, the company has become a powerful force in the decentralized finance space. Critics say the company’s position as both trading platform and active investor is a conflict of interest.
The company is also under several federal investigations, including from the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission. A Reuters report in January alleged that the company has weak money-laundering checks. In June, the company was prohibited from undertaking any regulated activity in the UK without the prior written consent of the Financial Conduct Authority, a financial regulatory authority.
The company told Reuters it is “both leading and investing in the future technologies and legislation that will set the crypto industry on the road to becoming a well-regulated, secure industry.”
Sky Mavis did not immediately respond to CNN’s request for comment on the investigations.
The-CNN-Wire
™ & © 2022 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.
