Galaxy Digital Criticizes Duel Casino Over Allegedly Stolen ETH

Alex Thorn, Head of Firmwide Research at Galaxy Digital, has criticized Duel Casino for its refusal to block nearly 230 ETH. These funds are allegedly linked to a victim of the Coldcard hardware wallet vulnerability exploit and were deposited into the internet gambling platform. Duel Casino maintains a policy of not freezing user funds without official law enforcement confirmation.

Key Takeaways

• Galaxy Digital has criticized Duel Casino for not blocking 230 ETH linked to a Coldcard exploit.
• Duel Casino requires official law enforcement confirmation to freeze allegedly stolen user funds.
• The incident highlights dilemmas faced by crypto platforms regarding fund recovery and compliance.

Technical Context

The incident involves approximately 230 ETH, which is Ethereum's native cryptocurrency, transferred on the Ethereum blockchain. These funds originated from a Coldcard hardware wallet vulnerability exploit, leading to their movement onto third-party platforms like Duel Casino. The exploit itself involved a vulnerability in the hardware wallet, rather than the Ethereum network.

Compliance and Regulatory Context

Duel Casino's policy stipulates that user funds will not be frozen based solely on third-party claims of theft. The platform requires official confirmation, typically from law enforcement, to initiate a freeze. This approach aims to prevent false claims and protect legitimate user balances from arbitrary blocking, even when presented with forensic data linking funds to an exploit, a common concern for blockchain crypto casinos.

"You have to understand the reason this policy exists, we require SOME sort of official confirmation that an actual theft occurred (so confirmation from law enforcement of any kind usually), otherwise anyone can claim stuff about their own balance or a counterparty or a third party they don’t even know and get accounts frozen," Korra, a Duel team member, stressed.

"We don’t freeze your Duel balance because someone asked us to. We simply don’t. I am sorry but that is how it is and we stand by that," Korra concluded.

Gabriel Shapiro, former Delphi Digital CLO, has supported Duel Casino's position, stating it is a "sane policy a crypto-adjacent fintech app, such as many Dapp crypto casinos, can have."

"It continues to be probably my only unpopular view but I still think this is pretty much the only sane policy a crypto-adjacent fintech app can have…" Gabriel Shapiro assessed.

Incident Details

The security incident involves an alleged exploit of a Coldcard hardware wallet, resulting in the theft of over 1,300 BTC in total, with 230 ETH specifically channeled to Duel Casino. Alex Thorn has labeled Duel's inaction as "outrageous," asserting that without freezing the funds, the casino is "complicit in theft." This situation underscores the challenges crypto platforms face in responding to security incidents without official legal directives.

"These shady people are refusing to freeze funds that have been forensically proven to emanate from a live cyber incident. If they do not freeze the funds, they are complicit in theft," Alex Thorn declared.

Sources: Galaxy Digital and Duel Casino Clash Over 230 ETH Linked to Coldcard Exploit