July 12, 2018 at
Following a successful hack attack on Monday, one of the virtual wallets of the cryptocurrency exchange company named Bancor became lighter for the approximate amount of $23.5 million in digital currencies.
The website went down for the course of the investigation, with the officials stating that users’ wallets are, and have always been, completely safe. The company found one of their wallets designed for updating smart contracts under attack, which ended up with the withdrawal of the aforementioned amount of different cryptocurrency tokens.
The company published an official statement on Twitter, promising to take all the necessary steps to resolve the issue, get the network back and track down the involved criminals. It managed to freeze the BNT tokens, which diminished the losses of this network.
However, they were unable to freeze the rest of the tokens and started working on various ways to prevent the hackers from transferring them into cash. Only a few minutes were needed to cause this breach, which, in turn, triggered serious consequences. Only time will tell what the ultimate outcome of this felony is going to be.
A unique form of cryptocurrency exchange
Bancor is, in its own words, “a decentralized liquidity network“, and it certainly is not your everyday cryptocurrency exchange, the first special characteristic of it being the lack of order book. Not handling things the usual way, they offer users a chance to swap one cryptocurrency for another, based on a price determined by an algorithm, whereas Bancor’s own fractional reserve system provides the liquidity.
This new way of functioning at first raised some eyebrows, but then, this company based in Israel topped the headlines last June when it managed to accumulate 153 million dollars in less than 180 minutes, generating one of the biggest initial coin offerings of all time, which was enough to attract pretty much everyone’s attention.
The attack causes the company to be criticized
Bancor was already criticized from time to time in the past, and this security breach has only fuelled those criticisms. Famously, two researchers disputed the claim that the company was decentralized. Calling the firm “essentially a central bank strategy“, and “a market maker“.
Whereas it is evident that they managed not to waste the users’ money, it doesn’t mean that the company itself hasn’t suffered serious capital losses, which, in turn, can pose a threat to the network’s integrity. Furthermore, the prices of all cryptocurrencies plummeted during the last twenty-four hours.
Bitcoin dropped to 6, 389 dollars (a 6-percent decline), and Ethereum to 437 dollars (a 10-percent decrease). The total market cryptocurrency cap reduced from 273 to 253 billion dollars in just over a day. Unfortunately, no-one of the company officials were available yesterday, but when we succeed in reaching them, we are certainly going to provide an update on the situation.
Cryptocurrencies were never a sure thing, but with these kinds of attacks happening more and more every day, one has to take the safety into account. The mentioned breach can be considered a mighty warning that next time, some of the users’ wallets are to become lighter.