IoTeX confirms $2 million in losses after private key breach

Warning about personal wallet security

IoTeX, a Layer 1 blockchain company specializing in the integration of the Internet of Things (IoT), DePIN (Decentralized Physical Infrastructure Network), and AI-based applications, has confirmed a security breach resulting in approximately $2 million in losses after hackers compromised the private keys associated with their cross-chain bridging infrastructure.

The incident, which occurred on February 21, 2026, caused the chain to be immediately shut down for 24-48 hours to deploy security upgrades, while the team worked with exchanges and analysts to track down and freeze the stolen funds.

Although IoTeX rejected the higher on-chain estimates of $4-9 million (including unauthorized token creation), the event highlighted persistent flaws in bridging protocols and key management, causing the IOTX price to drop by approximately 9% amid a general altcoin market downturn.

As a market analyst focused on blockchain and cryptocurrency assets, this attack highlights the inherent risks in cross-chain ecosystems—particularly for projects like IoTeX, which connect real-world devices to decentralized finance. Below, we will detail the attack mechanism, response efforts, market impact, and strategic implications for investors in the context of an uncertain 2026.

Why are private keys a structural risk ?

A private key is cryptographic authentication information used to authorize transactions on the blockchain. If the key is compromised:

• Money can be transferred irreversibly.

• Upgradeable contracts may be modified.

• Governance controls can be compromised.

Even highly secure protocols become vulnerable if key-holding measures are weak. As cryptocurrency projects scale, treasury security must meet institutional-grade standards.

Although $2 million is relatively small compared to large-scale DeFi exploits , the reputational consequences can be disproportionate. Investors often interpret security incidents as signals of governance maturity.

Short-term impacts could include token price volatility, erosion of community trust, liquidity shifts, increased oversight from partners, and long-term impacts will depend on transparency and remedial measures.

IOTX plummets amid pressure from altcoins.

IOTX reacted sharply, falling about 9.2% to around $0.0049 with a surge in trading volume reflecting panic selling and bargain hunting.

The token's market capitalization hovers around $46 million, highlighting its vulnerability at a mid-cap level in a BTC-dominated environment. The overall sentiment surrounding X reflects concerns about cryptocurrency security: Posts highlight " persistent security challenges " and link the event to calls for AI-based vulnerability detection (e.g., OpenAI's EVMbench). Discussions also note the hack's use of THORChain for money laundering , impacting $RUNE sentiment.

Our review

Private key leaks remain a leading attack method, as seen in recent incidents such as the $3 million loss at CrossCurve. For IoTeX – a platform that bridges IoT, AI, and DeFi – this breach raises questions about the bridge's sustainability, especially as it expands to include practical integrations (e.g., machine learning, DePIN projects).

On the positive side, limiting damage and acting quickly helps preserve core credibility. Following the upgrade, enhanced security through multi-signatures, MPC (multi-party computation), or hardware-based key management can strengthen defenses. This event also highlights tools like OpenAI's EVMbench for proactively patching security vulnerabilities.

For the ecosystem: Temporary liquidity disruptions may slow DePIN adoption, but IoTeX's focus on scalable and low-cost IoT solutions offers long-term resilience if security is prioritized.

Disclaimer: The information presented in this article is the author's personal opinion in the field of cryptocurrency. This is not financial or investment advice. All investment decisions should be based on careful consideration of your personal portfolio and risk tolerance. The views expressed in this article do not represent the official stance of the platform. We recommend that readers conduct their own research and consult with experts before making any investment decisions.

Compiled and analyzed by HCCVenture

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