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Hackers Steal $23.5 Million From Decentralized Cryptocurrency Exchange Platform Bancor

Bancor, a decentralized cryptocurrency exchange project has become the latest victim of cryptocurrency hackers. The company announced on Monday (July 9, 2018) that it experienced a security breach forcing it to shut down its operations. Bancor was one of the high profile ICOs of 2017, raking in $153 million during its token sale event.

Details of the Hack

Issues began yesterday when the platform announced a security breach. A few hours later, Bancor released a follow-up statement revealing that suspected hackers had stolen $12.5 million in ETH. The hackers also took BNT and NPXS tokens to the combined tune of $11m making the total loss to be $23.5 million.

According to the Bancor, the breach came via an online wallet being used to effect upgrades to certain smart contracts. The hackers were able to gain control of the wallet using it to siphon the stolen coins.

The Bancor team also announced that they were able to freeze the stolen BNT tokens – BNT is the native token of the Bancor platform. However, there is no way to freeze the stolen ETH and NPXS. Thus, the company plans to work in tandem with other exchange platforms in tracing the stolen ETH and preventing the cybercriminals from liquidating them.

Effect on the Bancor Cryptocurrency Price

Since the news of the hack became public, BNT token price has taken a significant tumble. At the start of yesterday’s trading, the BNT price was $3.15. By the end of the day, the price fell to $2.50. The decline has continued into its second day, today (July 10, 2018), dropping to $2.45. BNT has lost more than 20 percent since the attack.

The theft is yet another snag in the Bancor project development roadmap. Despite its fundamental premise and the successful ICO, the project has many doubters. Bancor is a decentralized exchange platform that employs a fluctuating price system for selling virtual coins even when there is no demand.

In 2017, Kyle Samani of Multicoin Capital said that Bancor didn’t provide any utility for the market. According to him, if exchanges decline to list any token, it is because that token isn’t good enough. He summarized his critique of the Bancor project thus:

For assets that actually have value, there will be a market. For assets that people don’t want to buy. Why should there be some pity-based programmatic market maker to provide liquidity? My inner capitalist is just dumbfounded by the concept of Bancor.

Will this latest hack adversely affect the prices of cryptocurrencies, especially Ether? Does this hack show that decentralized exchanges are just as vulnerable as their centralized counterparts? Keep the conversation going in the comment section below.

Image courtesy of Coinmarketcap.

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$1.2 Billion Dollars Have Been Stolen Since 2017 According to a Report

As cryptocurrencies expand and attract many investors all over the world, there have also been criminals trying to scam users and steal their funds. According to estimates form the Anti-Pishing Working Group, criminals have ben able to steal about $1.2 billion dollars in cryptocurrencies sin the beginning of 2017.

Cryptocurrency Criminals

The research shows that an important number of virtual currencies have been stolen from their owners. These are very alarming numbers for the crypto community. How to avoid being hacked if even top virtual currency exchanges have been affected by hacks?

The estimates that the non-profit group was able to gather, include reported and unreported theft of cryptocurrencies. That includes the most important hacks in the last times, and also minor thefts that couldn’t be reported to local authorities.

Dave Jevans, Chief Executive Officer of the cryptocurrency security firm CipherTrace, explained:

“One of the problems that we’re seeing in addition to the criminal activity like drug trafficking and money laundering using cryptocurrencies is the theft of these tokens by bad guys.”

Additionally, the recovery rate of owners has been 20% of the stolen funds – which is always better than nothing. Though, these numbers could be bigger if other security measures are implemented. But the truth is that law enforcement officials are having trouble to find criminals involved in these thefts.

According to Jevans, the new General Data Protection Regulation (GDPR), will negatively impact the overall security of the internet and will also aid cybercriminals. GDPR rules aims to simplify the rules that companies ned to follow

“By restricting access to critical information, the new law will significantly hinder investigations into cybercrime, cryptocurrency theft, pishing, ransomware, malware, fraud and crypto-jacking.”

Important Hacks

Since the beginning of 2018, the market has experienced different hacks that took place in different virtual currency exchanges. Two of the most important where the Japanese exchange Coincheck and the Italian platform BitGrail.

Coincheck was one of the most important virtual currency exchanges in Japan. At the beginning of the year, the exchange reported that it had been hacked resulting in a loss of 523 million NEM coins – which at that time were valued at $500 million dollars.

The company had to explain the situation to the media giving a press conference. The cryptocurrencies were not properly stored in cold or multi sig wallets, making it very easy for hackers to access the funds.

Another important hack occurred to BitGrail, an Italian cryptocurrency exchange that was focused on Nano tokens (former RaiBlocks / XRB). During a hack that took place at the beginning of February, the company announced that lost 17 million Nano – which price fell from $11.5 to $9.12 dollars.

$195 million dollars have been stolen, which means that between Coincheck and BitGrail they account for an important percent of the total $1.2 billion dollars stolen since the beginning of 2017.

After these two hacks took place, other exchanges decided to impose further security measures to avoid being attacked. It is always advised to users to save their virtual currencies in cold storage wallets.