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Crypto exchange hack and proof-of-reserves markets

Crypto exchanges hold large amounts of customer assets, and security failures or solvency problems can wipe out value quickly. Event contracts may ask whether an exchange will suffer a hack above a size, pause withdrawals, publish proof of reserves or file for bankruptcy. This SoftCta guide explains how each of those events is usually defined and verified.

How hacks are reported

When funds leave an exchange's wallets unexpectedly, on-chain analysts often spot the outflows within minutes. Early estimates of the loss are based on tracing transfers and valuing them at current prices. The exchange may confirm, dispute or revise the figure. Because token prices move, the same theft can be reported as different dollar amounts on different days. A contract on a hack "over $100 million" should say which valuation and which source count. The theft from Bybit in February 2025, at roughly $1.5 billion in ether, was among the largest reported and was publicly attributed by the FBI to North Korean actors.

Proof of reserves

After the FTX collapse in November 2022, many exchanges began publishing proof-of-reserves reports. These usually show wallet addresses or attestations that the exchange controls a certain amount of assets at a snapshot time, and a Merkle tree that lets customers check their balance is included in the liabilities. Limitations matter: a snapshot can be arranged, borrowed assets can appear as reserves, and liabilities outside customer balances may not be included. An attestation by an accounting firm is not a full audit. A contract on whether an exchange "publishes proof of reserves" is a much easier question than whether it is solvent.

Withdrawal pauses and insolvency

Exchanges pause withdrawals for routine maintenance, network upgrades and security reviews, so a pause alone is weak evidence of insolvency. Formal insolvency usually means a bankruptcy filing or regulatory action, which our bankruptcy guide covers. Status pages, described in our guide on reading exchange status, are the first place to check.

Rumours and timing

Hack and insolvency rumours spread fast on social media, sometimes before any evidence exists. Our guide on social media rumours explains why early claims need confirmation. Publicly listed companies may also have disclosure obligations, as covered in our cyber breach disclosure guide.

Personal custody context

For readers, these markets also illustrate why custody choices matter. Our guide on wallet custody versus exchange accounts explains the trade-offs, and our stablecoin depeg guide covers a related settlement-asset risk.

A reading habit

• Check how the loss is valued and which source confirms it.
• Separate pauses, hacks, attestations and formal insolvency.
• Note the deadline and whether later revisions count.
• Wait for on-chain evidence or official statements before reacting to rumours.

Convert prices with the implied probability tool and verify live prices on the venue.

Primary sources SoftCta readers open

• Exchange status pages and official incident statements
• On-chain explorers and analytics firms' public reports
• Court bankruptcy dockets
• Auditor or accountant attestation reports on reserves

Reading the quote step by step

• Read the full title and rules, including the named settlement source and the time zone.
• Convert the Yes and No prices to implied probabilities and note the gap between them.
• Subtract fees and spread to see the effective price you would actually face.
• Write your own probability range and the evidence behind it, then compare.
• Check related and near-duplicate markets on other venues for consistency.

Closing SoftCta checklist

• Re-read the venue definition in your own words before reacting to a price.
• Convert prices with fee and spread awareness; verify live cents on the operator.
• Prefer primary settlement sources over secondary headlines and social summaries.
• Treat ChanceWire hubs, movers, and tools as orientation — not order entry.
• Confirm age, location, and product eligibility; SoftCta pages will not suggest location spoofing.
• If clarity is incomplete, watching is a complete SoftCta outcome — no pick-selling urgency required.

SoftCta habits

• Write your own probability range before checking the crowd price.
• Prefer dated primary sources over social summaries.
• Compare related markets when a single book looks extreme.
• Size curiosity with fees and depth in mind; substantial risk of loss.