Toronto-based cryptocurrency exchange Newton recently experienced an outage to its platform related to a cyberattack affecting its custodial partner. As a result, some users are now complaining transactions, including withdrawals, are pending.
“Newton’s instance was not affected and no customer funds were at risk.”
On Tuesday, Newton wrote in a blog post it had temporarily paused trading and crypto withdrawals while it addressed an outage with its custodian related to a cyberattack.
“A short time ago, we learned that a customer of our custodial partner had been targeted with a sophisticated cyberattack resulting in loss of funds from a small number of their hot wallets,” Newton wrote. “Newton’s instance was not affected and no customer funds were at risk, however as a precaution our custodial partner disabled withdrawals from all hot wallets on their service. We also decided to halt trading until we better understood the situation.”
In the Tuesday blog post, Newton noted it is working closely with its partners to “safely restore access to crypto withdrawals and resume trading.” A process, the company said, which could take several hours to complete.
As of Wednesday afternoon, trading on Newton’s platform had been partially re-enabled for a number of cryptocurrencies. The status for wire, EFT, and crypto transfers were listed as normal, while e-transfers are listed as experiencing delays.
A number of Newton users have since taken to social media to note delays in attempts to withdraw their digital assets. While some complained their withdrawals have been pending for hours, others noted they have be able to obtain their assets.
Crypto transfers are just sitting there, pending. Your lack of transparency during this outage is really disappointing. How many customers are you loosing by keeping them in the dark?
— JS Morisset (@jsmoriss) April 28, 2021
Newton works with Toronto company Balance as its custodian. While Newton did not directly name Balance in the Tuesday blog post as the company that experienced the cyberattack, the partnership between the two companies dates back to 2019. Newton CEO Dustin Walper has described the partnership as preventing the next QuadrigaCX scandal.
RELATED: Newton announces partnership meant to prevent the next QuadrigaCX scandal
Noting the cyberattack affected a small number of hot wallets related to its custodian and that neither Newton nor its customers were affected, the company emphasized that it stores the majority of customer assets in cold storage and only keeps a limited amount of funds in hot wallets to facilitate withdrawals.
“Based on the incomplete information we have, it is unlikely that this type of attack would have succeeded against Newton’s hot wallets,” Newton wrote. “We will continue to provide updates as we receive them.”
When reached for comment CEO Walper told BetaKit, Newton has fully restored withdrawals and “most trading pairs and are processing trades and funding normally.”
“These events are common in our industry – we rely on a number of vendors to make our platform work, and if any of them go down for maintenance it affects our ability to offer service,” he said. “No customer funds were at risk, and we’re continuing to work on ways to improve the reliability and uptime of our platform.”
Walper added that from December 31 to April 28, Newton grew from 35,000 to over 175,000 users and on a daily basis processes between $5 million to 20 million in trades. “We’re scaling as fast as we can to meet insane demand growth, but right now we’re backlogged and working through support tickets as fast as we can. Support volumes explode whenever a vendor causes us to have downtime,” he said.
Newton launched in April 2018, allowing customers to link to bank accounts and trade in Bitcoin, Ethereum, and Litecoin. In August 2018, Newton received a conditional commitment of $15 million from DV Chain a liquidity provider in the cryptocurrency space.
BetaKit has reached out to Balance for comment.