How did Stake.com manage to fully cover the loss of over $40 million stolen from them in just a few hours?
Original Author: Nancy, PANews
On September 4th, the encrypted gambling platform Stake.com was attacked by hackers, with losses potentially reaching $41.3 million. However, Stake.com did not disclose the exact amount stolen, only stating that user funds are safe and all services have been restored.
The massive hacker attack has shocked the cryptocurrency community, and people are curious about Stake.com's asset reserve strength. How was Stake.com able to fully cover the stolen losses in a short period of time? What is the true revenue situation of this leading online gambling platform?
A total of over $41 million stolen, with all services restored in just five hours
Last night (September 4th), blockchain security firm PeckShield issued a statement saying that the encrypted gambling platform Stake.com was suspected to have been attacked. According to ZachXBT, the losses amounted to approximately $15.7 million (including 6,000 ETH, 3.9 million USDT, 1.1 million USDC, and 900,000 DAI). Later, blockchain investigator ZachXBT revealed that Stake.com had transferred an additional $25.6 million on the BSC and Polygon chains, bringing the total stolen amount to $41.3 million.
According to SlowMist founder Ye Xian, the theft of Stake.com is related to issues with the private keys. It might not necessarily mean that the private keys were stolen, but rather that interfaces/services related to the private keys were maliciously exploited.
However, Stake.com's official response to the theft incident seems particularly calm, only stating that unauthorized transactions occurred in the ETH/BSC hot wallet, without providing detailed explanations of the incident. Nonetheless, the platform assures that user funds are safe and that BTC, LTC, XRP, EOS, TRX, and all other wallets are operating normally.
Meanwhile, Ed Craven, Co-founder of Stake.com, also tweeted, "For (stolen) reasons, Stake will always reserve a portion of cryptocurrency in the hot wallet for emergencies. All affected wallets should be able to resume operations soon." Additionally, Bijan Tehrani, Co-founder of Stake.com, stated, "We will share more information as soon as we can."
Just five hours later, Stake.com announced that all services have been restored and all currency deposits and withdrawals are reopened.
Annual Revenue Exceeds $2.6 Billion, Once accounting for 5.9% of total Bitcoin Transactions
Stake.com is the 7th largest global gambling website based in Melbourne, Australia, with 600,000 regular users and 6 million registered accounts, mostly from "grey" areas in Brazil, Japan, and other Southeast Asian countries. According to consulting firm Regulus Partners, its annual revenue in 2022 alone is nearly $2.6 billion, approximately double the total revenue in 2021 and nearly 26 times higher than in 2020, surpassing well-known gambling platforms such as DraftKings and 888.
Income Changes of Stake.com from 2019 to 2022
According to Dune data, since August 2022, Stake.com has accumulated customer deposits exceeding $2.16 billion, with a total of over 429,000 users.
It is worth mentioning that, according to a tweet by Ed Craven, as of December 2022, Stake.com accounted for 5.9% of the total Bitcoin trading volume, 12.3% of the total Dogecoin trading volume, and 15.1% of the Litecoin trading volume.
The revenue of Stake.com, reaching as high as $2.6 billion, far exceeds many other cryptocurrency platforms. For example, Circle's annual revenue in 2022 was $150 million, Bitdeer's net revenue in 2022 exceeded $333 million, and MakerDAO's total revenue in the 2022 fiscal year was $65 million. Stake.com even surpasses the recent popular similar gambling platform Rollbit, which had an annual revenue of $350 million in 2022. Based on these published data, Stake.com is more than able to cover the stolen funds.
The enormous profits of Stake.com can be attributed to the leadership of Ed Craven and Bijan Tehrani. Among them, Ed Craven is also one of the youngest self-made billionaires in the world, ranking fifth on the 2022 Australian Financial Review Young Rich List with a net worth of $1.1 billion. He previously made headlines for purchasing two luxurious Toorak mansions for over 120 million AUD.
According to the Financial Times, Ed Craven and Bijan Tehrani met through the game RuneScape and co-founded the first online gambling site similar to Bitcoin dice game Satoshi Dice, called Primedice, in 2013. The site allows players to place bets using cryptocurrencies. According to the two founders, the price of Bitcoin was less than $20 at that time, and the early returns from their cryptocurrency investments provided ample funds for their business.
In 2017, Ed Craven and Bijan Tehrani founded Stake.com, which mainly offers online casino games and sports betting services. The platform supports betting with cryptocurrencies such as Bitcoin, Ethereum, Dogecoin, Litecoin, and Bitcoin Cash.
"A significant amount of marketing expenditure is crucial for a platform that combines cryptocurrency and gambling businesses, as it helps build user trust, especially when facing strong competition." To this end, Stake.com has invested heavily in advertising. In addition to being sponsors of UK football clubs Everton FC, Watford F.C., and Everton F.C., Stake.com has also signed a $100 million endorsement agreement with Canadian rapper Drake annually and formed a partnership with mixed martial arts organization UFC.
Canadian rapper Drake and Stake.com
Regarding Stake.com's success, Nigel Eccles, the founder of gambling company FanDuel, believes that Stake.com owes its success to its aggressive marketing and being the "first truly global, cryptocurrency-accepting gambling website".
And in the view of Ingo Fiedler, co-founder of the Blockchain Research Lab, the platform is largely attributed to the fact that cryptocurrencies and gambling are "natural allies," both attracting risk-seeking customers. "Day traders who use cryptocurrencies for speculation are a very similar group to typical gamblers, and the cryptocurrency market's slump after the big crash last year may also have prompted more traders to turn to gambling platforms."
