$9 million Stolen in WOO X Hack; Exchange Halts Withdrawals

• $9 million stolen from WOO X's hot wallets in security breach
• Platform halts withdrawals, pledges full reimbursement, and assists authorities with recovery

In November 2023, cryptocurrency exchange WOO X revealed a security breach where hackers stole $9 million from its hot wallets. In response, WOO X immediately paused withdrawals, pledged to reimburse all affected users, and announced it is working with security specialists to trace and recover the stolen assets.

Regulators are closely examining the exchange’s response under its obligations in multiple jurisdictions. In Taiwan, WOO X operates under the Financial Supervisory Commission's (FSC) Anti-Money Laundering (AML) rules, for which the company was approved for compliance in 2023. Taiwan is also evolving its regulatory framework for crypto exchanges, having passed the "Virtual Asset Management Bill" in October 2024 which requires licensing, security standards, and enhanced user protection. The law has been passed, imposing stricter requirements on WOO X.

In the European Union, WOO X's registrations in Poland and Italy subject it to the Markets in Crypto-Assets (MiCA) regulation, which will phase in from June 2024, with full effect expected by the end of 2024. The regulation legally requires crypto-asset service providers to reimburse users for losses from security breaches. Therefore, WOO X’s pledge to fully compensate users aligns with MiCA’s liability standards and strengthens its regulatory position in the EU.

Meanwhile, in the United States, the Consumer Financial Protection Bureau (CFPB) introduced a proposed rule in November 2024 that could extend protections from the Electronic Fund Transfer Act (EFTA) to cryptocurrency exchanges. If finalized, the regulation would give crypto users safeguards similar to those for bank customers in cases of unauthorized losses. The proposal is still under consideration and reflects a growing trend in the U.S. toward holding exchanges accountable for user funds.

Legal precedents from prior exchange hacks underscore the expanding expectation for platforms to protect user assets. For instance, a New Zealand High Court ruling in April 2020 following the Cryptopia case recognized cryptocurrencies as property held in trust for users. Similarly, after the Mt. Gox hack in 2014, user deposits became liabilities, which established a basis for legal claims against exchanges with inadequate security systems. These cases reinforce the fiduciary duties expected of crypto platforms.

In addition to its reimbursement commitment, WOO X provides transparency through a real-time Proof of Reserves, which it refreshes every 15 minutes. The exchange also maintains an insurance fund to cover specific losses, such as trading liquidations. The price of the WOO token remained relatively stable after the breach, which suggests the market responded positively to the platform’s swift actions and transparency.

In November 2023, CoinMarketCap reported that WOO Network (WOO) was trading at $0.54 as of 14:00 UTC, a price that remained stable despite a temporary decline in its 24-hour trading volume.