A 2-of-3 multisig arrangement with a third-party co-signer, where the exchange held two of the keys. Attackers compromised admin API credentials, lifted withdrawal limits, and executed over 2,000 unauthorised transactions.
~$72M at the time; multi-billion at later valuations.
Multisig where one party holds a majority of the keys is not distributed control. The key count was three; the failure domain was one.
These are the custody configurations structurally exposed to this kind of event. It describes the failure class, not any individual holder.
Whether your own arrangement sits in one of those groups is the question our Custody Independence Standard is designed to answer, and the four questions in Is your custody setup actually safe? walk through it.
DOJ filings, Ledger Labs / OCCRP reporting
Figures are as reported by the named sources. Proof of Custody has not independently reproduced the underlying analysis.
Proof of Custody, "Bitfinex" incident record, proofofcustody.io/incidents/bitfinex-2016A 2-of-3 multisig arrangement with a third-party co-signer, where the exchange held two of the keys. Attackers compromised admin API credentials, lifted withdrawal limits, and executed over 2,000 unauthorised transactions. Reported loss: 119,756 BTC.
Multisig where one party holds a majority of the keys is not distributed control. The key count was three; the failure domain was one.
This class of failure could reach: bitcoin left on an exchange. It describes the failure class rather than any individual holder.