A recent incident at Kraken involved a black hat hacker stealing $3 million from the company by exploiting a bug in the exchange’s systems. Nick Percoco, the chief security officer at Kraken, took to the social media platform X to share the details.

According to Percoco, Kraken received an alarming update from their Bug Bounty program about a critical bug that could be exploited by hackers to manipulate their funds. After investigating, they found a bug that allowed attackers to deposit funds into their accounts without completing the process fully.

Although no client assets were in danger, malicious attackers were able to create assets in their Kraken accounts temporarily. After fixing the bug, Kraken discovered that three accounts had taken advantage of this flaw. Through KYC forms, they identified one account holder as someone claiming to be a security expert.

Instead of reporting the exploit, this individual shared the information with two others who proceeded to withdraw nearly $3 million from their accounts. Despite Kraken’s attempts to retrieve the money, the person and his associates are refusing to return it, demanding a speculated amount that the bug could have caused if left unchecked.

Bug bounty programs are designed to reward individuals who find and report bugs, known as “white-hat hackers.” Percoco emphasized that exploiting these programs to harm companies makes one a criminal, revoking their license to hack. Following the rules of bug bounty programs is essential to maintain ethical hacking practices.

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