Swift Response and Assurance: Customer Accounts and Security Uncompromised Despite Third-Party Service Provider Cybersecurity Incident
The INX Digital Company, a security token and digital asset trading platform, U.S. broker-dealer, alternative trading system, transfer agent, and inter-dealer broker (through its subsidiaries), announced that on December 20, 2023, it learned of a cyberattack that occurred on the computer systems of a third-party vendor providing services to one of the Company’s subsidiaries.
As a result, a malicious actor managed to access the third-party vendor’s servers and executed unauthorized trades which resulted in a loss of funds of the Company’s subsidiary of approximately $1.6 million. The Company took immediate actions to remediate the security vulnerability and to investigate the nature and scope of the incident. The Company also notified relevant law enforcement in the appropriate jurisdictions and is working with the affected trading venue to investigate this incident and take appropriate legal action.
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INX customers were not affected by the incident, and the security breach at the third-party provider did not have any impact on the platforms and servers of INX. No personal information or other data of INX’s customers was compromised, and INX.One remains fully operational. The Company placed additional security measures in place and continues to actively monitor any suspicious activity.
The Company holds a “Reserve Fund” (which is not part of the Company’s operational capital) in the amount of $36,023,000, which is restricted and specifically designed to cover customer and INX losses, if any, that result from cybersecurity breaches or theft, errors in execution of the trading platform or its technology, and counterparty defaults, including instances where counterparties lack sufficient collateral to cover losses. The Company will seek to recover the lost funds through any means necessary. If unsuccessful, and after these efforts are exhausted, the Company will utilize the Reserve Fund for the recovery of the loss that resulted from this security incident. There is no assurance that any such lost funds will be recovered.
The Company does not expect this incident to have a material impact on its business operations or its financial results.
INX provides regulated trading platforms for digital securities and cryptocurrencies. With the combination of traditional market expertise and a disruptive fintech approach, INX provides state-of-the-art solutions to modern financial problems. INX is led by an experienced and dedicated team of business, finance, and technology veterans with the shared vision of redefining the world of capital markets via blockchain technology and a disciplined regulatory approach.
The INX Digital Company, Inc. is the holding company for the INX Group, which includes regulated trading platforms for digital securities and cryptocurrencies. The INX Group’s vision is to be the preferred global regulated hub for digital assets on the blockchain. The INX Group’s overall mission is to bring communities together and empower them with financial innovation. Our journey started with our initial public token offering of the INX Token, in which we raised US$84 million. The INX Group is shaping the blockchain asset industry through its willingness to work in a regulated environment with oversight from regulators like the SEC and FINRA.
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