Why Binance led the Axie Infinity bailout, and what it means for crypto’s future – TechCrunch

Advertisements

The company behind Axie Infinity, a popular crypto play-to-earn game, raised $150 million in funding this week to help reimburse users who lost funds worth about $625 million in a hack last week. Axie Infinity’s creator, Vietnamese gaming studio Sky Mavis, had garnered wide acclaim for building the most-played NFT game of all time, with 2.2 million monthly active players, according to the company.

What’s interesting about this funding round is that it was led by crypto exchange Binance – the highest-volume exchange globally – although Binance hadn’t participated in Sky Mavis’ prior raises. More on that later, but first, some context.

Existing Sky Mavis investors, including Andreessen Horowitz, Paradigm, and Accel, joined Binance in this round to help bail out Axie, but once news of the hack broke, their involvement was all but expected. Those investors already had a financial stake in the game’s success, particularly a16z, which led the company’s $152 million Series B round last October. Sky Mavis earned a nearly $3 billion valuation during that round, signifying quite a bit of fanfare for a company that had raised a total of just $7.5 million five months prior.

The hack, which took place on Axie’s Ethereum-based sidechain, Ronin, marks the largest known crypto heist to date. It was a bad look not only for Sky Mavis, but also for investors like a16z that had hyped Axie as the future of crypto. It begins to look even worse when you consider the demographics of Axie players overall – over 25% are unbankedthe company said, and many are low-income workers in developing countries who rely on Axie for a significant portion of their income.

It took six days before Sky Mavis or any of its investors discovered the hack had occurred, which infuriated a lot of people, and once the company found out, it immediately scrambled for solutions. While Sky Mavis announced it was working with law enforcement to investigate the situation, it’s very rare for funds to be recovered after a crypto hack, let alone returned to users. The search process is just too complex, given that there’s no information about the hacker readily available besides the wallet address they used to transfer funds out of Axie.

It’s worth noting that the majority of the funds are still sitting in the hacker’s wallet, although the hacker did appear to move some 2,000 ETH out of the wallet to privacy tool Tornado Cash, which allows users to mask their wallet address while withdrawing funds.

So if Sky Mavis couldn’t track down the hacker and recover the funds that way, it had to think of other ways to make up the shortfall or risk the reputational hit of letting its users take a huge financial loss that stemmed from the company’s own security weaknesses.


Share post on

Sonic BTC is reader-supported. When you buy through links on our site, we may earn an affiliate commission.

Horizon provides Binance connectivity to its crypto buying and selling platform – FinanceFeeds Binance

Horizon provides Binance connectivity to its crypto buying and selling platform – FinanceFeeds

“We're already connected to main cryptocurrency exchanges and offering full scope of Principal Trading...

By wpadminsonic164
Crypto Exchange Provider Ranking’s Triumvirate of Binance, Coinbase and Crypto.com Remain on Top – PYMNTS.com Binance

Crypto Exchange Provider Ranking’s Triumvirate of Binance, Coinbase and Crypto.com Remain on Top – PYMNTS.com

It's probably worth pointing out that thanks to ties, there are now nine members...

By wpadminsonic164
Bitcoin Slips Beneath $ 50,000 As Binance Whale Warns Urgent BTC Value By Cointelegraph – Investing.com Binance

Bitcoin Slips Beneath $ 50,000 As Binance Whale Warns Urgent BTC Value By Cointelegraph – Investing.com

© Reuters. (BTC) lost $ 50,000 for the first time in days on December...

By wpadminsonic164
Binance Builds $1 Billion Insurance coverage Fund to Cowl Potential Hacks – The Block Crypto Binance

Binance Builds $1 Billion Insurance coverage Fund to Cowl Potential Hacks – The Block Crypto

display Binance has raised around $1 billion for an insurance fund created as a...

By wpadminsonic164
Binance is a Fully Regulated Digital Asset Service Provider in France, Just After Receiving Licenses in Dubai and Bahrain – African Business Binance

Binance is a Fully Regulated Digital Asset Service Provider in France, Just After Receiving Licenses in Dubai and Bahrain – African Business

Binance (www.Binance.com), the world's largest crypto and blockchain infrastructure provider, announced earlier that Binance...

By wpadminsonic164
‘India needs guideline before crypto speculations increase’: Binance APAC Head – The Indian Express Binance

‘India needs guideline before crypto speculations increase’: Binance APAC Head – The Indian Express

Despite regulatory challenges in India, Binance, the world's largest cryptocurrency exchange, is bullish on...

By wpadminsonic164
Binance stops Luna and UST exchanging following implosion – TechCrunch Binance

Binance stops Luna and UST exchanging following implosion – TechCrunch

Binance, the world's largest cryptocurrency exchange, has halted the trading of Terraform Labs' Terra...

By wpadminsonic164
How will regulatory points and obligatory KYC have an effect on the value of Binance Coin (BNB)?  – Cointelegraph Binance

How will regulatory points and obligatory KYC have an effect on the value of Binance Coin (BNB)? – Cointelegraph

Binance Coin (BNB) was up 30% in two weeks, but the fourth largest cryptocurrency...

By wpadminsonic164

Latest Posts

Second STATE Token Launch and Declare Occasion Announcement – Medium Polkadot

Second STATE Token Launch and Declare Occasion Announcement – Medium

ParaState is pleased to announce the release of our 2nd tranche of STATE tokens...

By wpadminsonic164
BTC Information – Heineken prevê aumento de preço Videos

BTC Information – Heineken prevê aumento de preço

Painel diário de notícias de negócios e empresas, comentadas e analisadas pela Business Training...

By wpadminsonic164
Bitcoin Enchancment Proposal 21 Eases Person Expertise When Paying Invoices Bitcoin

Bitcoin Enchancment Proposal 21 Eases Person Expertise When Paying Invoices

The below is a direct excerpt of Marty's Bent Issue #1181: "BIP21 is a...

By wpadminsonic164
Instructions to Research Stablecoins | USDC, USDT, BUSD, PAXOS – Cardano Feed Cardano

Instructions to Research Stablecoins | USDC, USDT, BUSD, PAXOS – Cardano Feed

by Robin Smith May 24, 2022 DeFi videos In the part 1 of 2...

By wpadminsonic164
Kaspars Koskins, CEO of ADALend: “We’re constructing a safe lending platform on Cardano” |  Bitcoinist.com – bitcoinist.com Cardano

Kaspars Koskins, CEO of ADALend: “We’re constructing a safe lending platform on Cardano” | Bitcoinist.com – bitcoinist.com

Launch of the interview series from ADALend CEO Kaspars Koskins, one of the most...

By wpadminsonic164
Bitcoin plunges, and might there be another challenger on the way? Videos

Bitcoin plunges, and might there be another challenger on the way?

Brian Kelly on bitcoin's fall and Powell's comments on digital dollars. With CNBC's Melissa...

By wpadminsonic164
There’s an Insatiable Urge to Burn Crypto — A Have a look at Why Tasks Burn Tokens and the Advantages Bitcoin

There’s an Insatiable Urge to Burn Crypto — A Have a look at Why Tasks Burn Tokens and the Advantages

In recent times, cryptocurrencies that burn tokens have been very popular and a number...

By wpadminsonic164
Horizon provides Binance connectivity to its crypto buying and selling platform – FinanceFeeds Binance

Horizon provides Binance connectivity to its crypto buying and selling platform – FinanceFeeds

“We're already connected to main cryptocurrency exchanges and offering full scope of Principal Trading...

By wpadminsonic164