Last week’s massive crypto crash didn’t just hit traders, it also wiped out millions in stolen funds from hackers who, caught up in the panic, misplayed the market with disastrous timing.
Blockchain practitioner Lookonchain has traced at least six wallets linked to known hackers that lost more than $13.4 million after panic selling ether during the downturn.
The hackers in question appear to be part of a group of cybercriminals who have recently engaged in cryptocurrency theft. The mention of “6 hacker wallets” losing over $13.4 million suggests a coordinated effort, possibly linked to a known hacking syndicate.
Buy high, sell low
The selloff began when one wallet unloaded 7,816 ETH at $3,728 per coin, a move that coincided with the steepest part of the crash. As prices fell further, five more wallets followed suit, adding to the broader market dump.
But instead of keeping the sold assets in stablecoins or trying to launder the ETH, the hackers repurchased the same amount – 7,816 ETH – at $4,159 as the markets rebounded, locking in another round of losses.
By October 18, blockchain analysis revealed that the total loss from these trading errors reached $13.4 million.
Given the scale of the funds (about $29 million in the latest transaction alone), these hackers are likely sophisticated actors with access to advanced tools to exploit vulnerabilities in decentralized finance (DeFi) protocols, exchanges, or smart contracts.
Panic sales
The hackers’ trading patterns in volatile market conditions suggest that while they are experienced in exploiting ecosystem players, they react to market fluctuations as any other overleveraged trader would: with poor timing and emotional decision-making.
Lookonchain labeled the behavior “panic selling,” while some crypto observers even joked that the attackers could be “big hackers, terrible traders.”
It wasn’t all their money
However, the hackers likely acquired these funds through hacking. So while the losses are real, the funds were probably not earned, but stolen.
Blockchain analysts believe the ETH originated from previous attacks, meaning the hackers were trading assets they hadn’t bought in the first place.
In that sense, the losses may not hurt the way they would for ordinary traders.
Think of it this way: someone finds a suitcase of cash, gambles badly on it, and walks away empty-handed. They’re worse off than before, but they’re not out of pocket since the money they lost wasn’t theirs in the first place.
Maybe the hacker group should have just stuck to hacking and maybe start looking for a criminal portfolio manager. Still, the missteps reveal something about the current state of the crypto landscape. Even sophisticated attackers can falter under pressure.
Washing trade
There is another option out there. Although they were ‘terrible traders’, they may also have laundered their ill-gotten gains through these trades, strategically dumping tainted funds during the panic and then buying back clean funds even though they were at a loss.
As one X poster said, “It’s a form of money laundering. While they’re breaking, they buy on the other side. Then they turn around after they come up. Redeem the stolen money, make fresh money.”
The October 10 market correction affected traders across the board, triggered by a combination of macroeconomic pressures and thinner liquidity in decentralized markets that led to a $500 billion decline.
While hacks and exploits are usually seen in isolation, last week’s developments show how on-chain markets, by design, apply the same rules to everyone: whether they are retailers, whales or hackers.
