Tue, 23 Oct 2018
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Cryptocurrency project Bancor hacked, loses $23.5 million

By Sheetal Sukhija, New Mexico State News
12 Jul 2018, 05:42 GMT+10

TEL AVIV, Israel - Israeli crypto-startup Bancor, which managed to raise $153 million to create a digital token exchange last year, announced this week that it had suffered a heist, in which hackers raided one of its online wallets to the tune of $23.5 million.

The controversial cryptocurrency project first disclosed it had suffered an unspecified security breach earlier this week, to follow up the claim hours later, by a statement on Twitter.

In the statement, the company which calls itself a decentralized crypto-trading platform, explained that hackers had exploited a vulnerability to steal 24,984 Ethereum tokens (ETH) worth approximately $12.5 million, $1 million worth of NPXS and about $10 million worth of Bancor’s native currency known as BNT.

According to the company, the hack occurred at approximately 00:00 UTC when a wallet used to upgrade some smart contracts was compromised.

Bancor stated that this was built in to “be used in an extreme situation to recover from a security breach, allowing Bancor to effectively stop the thief from running away with the stolen tokens.”

The company explained on Twitter that while it was able to freeze the movement of the BNT tokens - stopping the thief from making off with them, it was unsuccessful in doing the same for the Ethereum or for $1 million worth of NPXS tokens.

Further, Bancor added that it had temporarily shut down its network while it addresses the security issues. 

Bancor reiterated that it has identified a security breach and will investigate the issue, assuring that no user wallets were compromised and that the company would release a more detailed report soon.

It said that it was now “working together with dozens of cryptocurrency exchanges to trace the stolen funds and make it more difficult for the thief to liquidate them.”

A day after the heist was reported, Konstantin Gladych, CEO of Changelly said in a statement to Cointelegraph that parts of the stolen funds have been exchanged via Changelly.

A month after it launched, in July 2017, the Israeli crypto-startup, received the support of billionaire Tim Draper, and raised $153 million in a span of three hours making it one of the largest Initial Coin Offerings (ICOs) ever.

The company created the record on the promise of creating a liquidity market for lesser used digital currencies, even though many in the industry remained skeptical of its premise of using a fluctuating price system to provide an outlet for selling those digital tokens—even if there is no available buyer for them.

Following the heist, many experts are now questioning the exchange' decentralization characteristics.

In response to the robbery, Charlie Lee, the creator of Litecoin, said on Twitter, “A Bancor wallet got hacked and that wallet has the ability to steal coins out of their own smart contracts. An exchange is not decentralized if it can lose customer funds OR if it can freeze customer funds. Bancor can do BOTH. It's a false sense of decentralization.”

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