Axie Infinity sets timetable for recovering stolen crypto assets

The company behind the Axie Infinity blockchain game, Sky Mavis, aims to recover at least part of the stolen crypto worth about $600 million. But the project team acknowledged that the process will take time, according to Bloomberg.

“We expect that over the course of two years some funds will be recovered. Two years is a good timeframe for Axie to gather more information. We are in this for the long run,” said Sky Mavis’ chief operating officer Alexander Leonard Larsen.

According to him, the company is working with law-enforcement agencies to track and recover the tokens, mostly Ethereum. He did not disclose details of the investigation.

Rishav Rai, the chief investigator at Merkle Science, a crypto-security-focused firm, noted that cases of recovering all stolen funds after major attacks are “very rare.” On the other hand, after such incidents, it is difficult for hackers to launder the assets.

After the Ronin sidechain hack, the attacker sent a portion of Ethereum to the Tornado Cash mixing service. However, such tools are not built for large volumes, and moving assets across different wallets and exchanges is costly and time-consuming, Rai added.

Larsen confirmed that the hack was carried out via social engineering targeting one of the employees. The hacker gained access to five of nine nodes, enabling unauthorized withdrawals.

Earlier Sky Mavis promised to reimburse users for losses. In early April the company raised $150 million for these purposes from a group of investors led by Binance.

To fully compensate the stolen cryptocurrency, the firm is using $450 million of its own funds. Larsen emphasised that the company’s financial position remains solid.

As of March 28, the number of players had fallen by 45% from the November 2021 peak. The head of Sky Mavis linked this to a sharp drop in rewards, which deterred those who viewed participation as a way to earn money. He also acknowledged the possible impact of the hack on player retention.

“Undoubtedly, the incident will haunt us for a long time going forward. We feel that we did not meet users’ expectations and that trust must be restored. But I view this as a lesson, that security must be a priority,” Larsen said.

In Q1 2022, crypto projects lost more than $1.22 billion due to hackers and scammers.