Polymarket Loses $600K in Key Exploit; 5 Crypto Firms Close

Polymarket reported that a suspected private‑key compromise allowed an attacker to drain more than $600,000 from a wallet used for internal top‑up operations while saying core contracts and market resolution were not affected. The company posted that user funds and market settlement processes remain intact and that permissions tied to the legacy key have been revoked.

Engineers traced the issue to an adapter contract used with UMA’s Conditional Tokens Framework on the Polygon network. Onchain records showed more than 100 small transfers into the attacker address, with repeated movements of roughly 5,000 POL tokens at intervals of about 30 seconds. At the time of Polymarket’s update, those transfers brought reported losses to about $600,000. Polymarket’s vice president of engineering noted the compromised key dated back six years and was used only for internal top‑up tasks, not for controlling core market contracts.

The company said it is conducting forensic work and coordinating with blockchain monitoring services to track stolen funds. Developers removed related permissions from legacy infrastructure and indicated that market resolution processes continued without interruption while the investigation proceeds.

Separately, at least five crypto firms announced shutdowns this week. Fantasy.top, a crypto trading‑card platform, said it will close in June after trading volume proved insufficient to sustain operations; co‑founder ‘Kipit’ described the product-market fit as unsuccessful. Cross‑blockchain infrastructure firm Everclear said it was winding down its foundation and labs after failing to develop enough commercial revenue. ZERO Network announced it would shut down to concentrate resources on its sister wallet and data service, Zerion. Earlier in the week, Syndicate Labs, an Ethereum infrastructure firm, announced it was winding down, and Bitcoin Depot, a crypto ATM operator, filed for bankruptcy protection in the United States.

The recent closures come amid a prolonged market downturn. Many public companies reported first‑quarter losses, and industry employers have reported more than 5,000 job cuts so far this year.

In South Korea, a formal petition to repeal a proposed 22% tax on digital‑asset investment gains surpassed the 50,000‑signature threshold required for review by the National Assembly’s Finance and Economic Planning Committee. The tax regime is scheduled to take effect in January 2027. Petition supporters argue the levy treats crypto less favorably than other asset classes and could reduce domestic investment and drive capital and talent overseas. A translated passage from the petition reads: ‘If taxation is enforced in order to secure short‑term tax revenues, it is likely to lead to greater losses in the long term, namely, a contraction of industry and an outflow of capital and talent abroad.’ The petition reported more than 52,000 signatures at the latest update.

Polymarket remains engaged in forensic analysis and is working with blockchain trackers to follow the flow of funds. The National Assembly committee will review the petition seeking to abolish the proposed crypto gains tax.