Solana wallets ‘drained’ in blow to crypto network

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Thousands of crypto accounts linked to the Solana blockchain have been “drained” in a blow to one of the biggest networks in the digital asset market.

Solana and several other platforms linked to the blockchain were on Wednesday investigating an apparent hack that affected at least 7,767 digital wallets, the computer programs that store traders’ crypto tokens.

The Solana Foundation, a non-profit focused on the growth and security of the Solana network, told the Financial Times that it “does not appear” that the exploitation had affected its core infrastructure, but rather was caused by a bug “in software used by several wallets popular among Solana users”.

The apparent hack marks a fresh setback for Solana, which has been touted as one of the potential long-term winners of the crypto industry because it was built to handle thousands of trades a second but has faced a series of outages in recent months.

The Solana Foundation said on Wednesday that “engineers from multiple ecosystems, with the help of several security firms, are investigating drained wallets on Solana”. In many recent crypto hacking episodes, users did not receive their funds back since transactions typically cannot be reversed on blockchains.

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Phantom, a wallet app built on Solana, and Solana non-fungible token marketplace Magic Eden were among the providers that said they were affected in the apparent hacking incident.

The Solana Foundation said wallets that allow traders to hold their coins offline rather than using online applications did not appear to have been affected.

Solana Labs, a developer of the Solana blockchain, is backed by big groups in traditional and cryptocurrency markets including venture capital company Andreessen Horowitz, high-speed trading shop Jump Trading, and Sam Bankman-Fried’s Alameda Research.

Solana is designed to process up to 50,000 trades a second, a scale far in excess of rivals including bitcoin and ethereum, and on a par with established traditional financial services such as the Nasdaq stock exchange. In January, Bank of America analysts said Solana “could become the Visa of the digital asset ecosystem”.

However, Solana has suffered processing glitches that have tarnished its reputation. The entirety of the Solana network went dark for four hours in June, an outage that was documented on the network’s official status website.

The blockchain’s eponymous native coin has tumbled almost 80 per cent this year, bigger than the drops sustained by its larger rivals bitcoin and ether.

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