- Gate recorded $207 million in weekly net outflows as scrutiny grew over a reported $1.7 million theft.
- Bitrace traced 49.96 ETH, 746,475 HSK, and 1.565 million USDT withdrawn from the compromised account.
- Gate denied a system-wide breach, saying the security change request passed identity and review checks.
- Investigators linked the fund trail to Newpay, while recovery depends on police and third-party cooperation.
Gate recorded about $207 million in net outflows over seven days as scrutiny increased over an alleged $1.7 million theft from a customer account. A July 11 Wu Blockchain snapshot placed the exchange second among centralized platforms for weekly outflows.
Meanwhile, Binance led inflows with approximately $308 million. Considering that DeFiLlama uses a rolling window, its dashboard later showed Gate’s seven-day outflow widening to about $251 million. The platform tracked nearly $3.98 billion in assets.
The dispute began after @jheioff said an identity-verified account was taken over and emptied without authorization. Bitrace later reported withdrawals of 49.96 ETH, 746,475 HSK and 1.565 million USDT, valuing the combined loss near $1.7 million.
Gate Details Identity Checks Behind Security Change Request
Account security settings reportedly changed between July 4 and July 6, after which five withdrawals were completed on July 7. The customer then discovered the missing funds on July 8 and promptly reported the incident.
Consequently, the timeline placed the exchange’s identity checks and account-recovery procedures under closer scrutiny. Gate, however, denied that the incident resulted from a platform-wide breach and released further details about the security change request.
According to the company, the applicant provided accurate identity information, historical trading records and an Alipay transaction recording. Gate also said the applicant’s IP address originated from the same region as the account’s recent activity.
In addition, the exchange said it sent email and SMS alerts when the application was submitted. The request subsequently underwent a two-day review period, followed by a 24-hour withdrawal restriction.
Gate said it received no objection during either window, although the customer later challenged the legitimacy of the process. Nevertheless, the exchange apologized for its initial public response, acknowledging that its tone failed to prioritize the customer’s concerns.
Following the criticism, Gate formed a task force involving its security, compliance, legal and business teams. At the same time, the company assisted with police documentation and began continuously monitoring the withdrawn assets on-chain.
Bitrace Traces Withdrawn Assets Through Newpay-Linked Wallet
Bitrace said the assets were divided across several transactions before converging at an address associated with Newpay, a non-KYC payment service. The service is linked to the Xinbi ecosystem, giving investigators a possible destination for examination.
However, the analysis does not establish how the account was compromised or identify who controlled the receiving wallets. Gate said it contacted Tether and exchanges receiving the assets, seeking cooperation to freeze funds reaching identifiable platforms.
Nevertheless, recovery will depend on law enforcement action, judicial coordination and assistance from third-party services. The exchange-flow figures also require caution as DeFiLlama removes token-price movements when calculating changes in tracked balances.
Therefore, outflows may include customer transfers, internal wallet reorganizations or regulatory migrations rather than withdrawals linked to one incident. Binance’s positive weekly reading followed heavy monthly outflows around Europe’s July 1 MiCA deadline.
Meanwhile, Bybit progressively restricted its global platform for European Economic Area residents. Even with those factors, Gate’s seven-day outflow showed customer movement during increased attention around account security and withdrawal controls.
However, the data does not prove a solvency problem. Instead, it records a decline in tracked assets while the theft investigation and recovery efforts continue.
The post Gate Outflows Hit $207M After User Reports $1.7M Account Theft appeared first on Blockonomi.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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