Hackers are reported to have stolen $13.5 million of user crypto-currency tokens from the Israeli start-up and decentralized crypto-currency trading platform Bancor.
What Happened?
It has been reported that on Monday, hackers were able to access and compromise a wallet on the Bancor platform that is used to upgrade smart contracts. These smart contracts have been likened to digital vending machines which manage crypto-currency transactions so there is no need for a middle-man.
This compromised wallet was then used by the hackers to steal different types of crypto-currency tokens from Bancor’s customers. The stolen tokens are reported to comprise 24,984 ($12.5 million) in Ethereum tokens, and 229, 356, 645 NPXS (approx. $1 million).
The total loss in the hack would have included an extra 3,200,00 of Bancor’s own token BNT (approx. $10 million), had Bancor not frozen the $10 million of its own Bancor tokens (BNT) as soon as it found out about the hack.
Bancor, which raised over $150 million in an ICO last year, is reported to have taken its exchange offline while it conducts an investigation of the incident.
Criticism
Following reports of the incident, some commentators have criticised Bancor for advertising itself as decentralized, and yet responding to the hack with strategies like those of a centralised system.
Centralised exchanges have received criticism for demanding large fees up front to list tokens, while not appearing to use those fees to help security, judging by the number and frequency of hacks.
User of MyEtherWallet Crypto-currency Also Hit By Hack
In the same week as customers of Bancor took a hit form a hack, so did one of the internet’s most popular services for managing crypto-currencies, MyEtherWallet. MyEtherWallet (MEW) is used to access crypto wallets and also to send and receive tokens to and from other wallets.
For the MEW hack, it has been reported that the hackers compromised ‘Hola’ for about 5 hours. Hola is a free VPN that plugs into browsers, and claims to have nearly 50 million users. Compromising Hola meant that any users who navigated to MEW and accessed their wallet with the VPN switched on are likely to be those who fell victim to the hackers.
What Does This Mean For Your Business?
Many businesses and individuals have been deterred from investing in and using crypto-currencies after the bad press surrounding the Bitcoin bubble and the associated crypto-jacking schemes, media reports of multiple hacks to different exchanges/platforms and crypto-currencies, and a general lack of knowledge and confidence about crypto-currencies. The Bancor and a MyEtherWallet hacks are just two more indications of the many existing security issues (particularly with centralised systems), and maybe two more reasons why businesses may shy away from all things crypto-currecncy.
The fact is, however, that crypto-currencies could have many advantages for some businesses, such as the speed and ease with which transactions can take place due to the lack of central banking and traditional currency control. Some crypto-currencies e.g. Ripple, are actually products of banks. Crypto-currencies generally mean easier, faster and more convenient cross-border and global trading, but traditional currencies tend to have the backing of assets or promises of assets of some kind. Crypto-currencies, therefore, tend to be less trusted and more volatile in the markets and governments and banks don’t like the fact that they have no real control over them.
In the case of the MEW hack, this is also an example of why it is better to pay for a VPN service rather than use a free one.
