Cryptopia goes into liquidation because of debt, cannot return customers’ assets!

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Recently, Cryptopia, a New Zealand-based cryptocurrency exchange which previously experienced a large security breach, announced that they are going into a liquidation process. They have appointed David Ruscoe and Russell Moore from Grant Thornton New Zealand as the liquidators. 

The result of a recent hack

Previously we reported that Cryptopia suffered from a hacker attack and for a brief moment it almost seemed like Cryptopia has lost all control over their Ethereum wallets. The exchange lost around 30k Ethereum and other assets. Since then Cryptopia had notified the New Zealand police and other legal instances.

After this, judging by their Twitter communication in mid-March, they entered a “coin securing” phase. Within this phase, they said that they are moving all the assets to new wallets. Afterword, they re-opened trading on their platform, and around mid-April they allowed BTC, LTC and DOGE deposits, but never really opened up withdraw functions.

Later, at the end of April, they stopped communicating for a couple of weeks. Then came out with the recent announcement about the liquidation process.

Users cannot withdraw funds because of an investigation

Cryptopia just published a “Liquidation FAQ” where they state:

“We are now undertaking an extensive process to confirm amounts owing and available to return to customers. This is a complex process and will likely require direction from the New Zealand Courts. Until the investigation has concluded we cannot return any crypto-assets to customers.”

Also, they claim that their first priority is to secure all crypto-assets on the exchange. But the weird thing is that they “need to confirm the amounts owing and available to return to customers”. And this process, as they say, is very complex and they need the direction of New Zealand courts “to make sure a fair legal solution is found”.

Went into liquidation because their debts fell due!

As they describe in their FAQ, Cryptopia’s main reason why they’re entering liquidation process is their situation with debt. Customers and Twitter users are commenting that one of the reasons why Cryptopia cannot answer anything about their customer’s assets is because they are thinking of covering their debts with customers money.

Every FAQ about customers assets ends with the same phrase: “Until the investigation has concluded, we cannot confirm whether individual customers will get all of their crypto-assets returned,” or “We cannot confirm any customer balances until we have completed our investigation,” or “At this stage we cannot confirm what will be returned or whether crypto assets will be returned as crypto-assets or fiat currency.”

Basically, they say that they know nothing about their customer’s assets, and they don’t guarantee that they will even get them back at some point.

Respectively, many users are really upset to hear this kind of response from Cryptopia. And they rush to conclusions such as Cryptopia is exit-scamming and stealing customers assets. But that seems like a logical response to what Cryptopia had explained. The exchange basically says that they got huge debt, and they won’t allow anyone to access their funds. Also, they don’t say whether customers will get their funds back. Whether or will they get them back at all, and they cannot even provide a reasonable timeframe.

Binance vs Cryptopia

As we recently witnessed, Binance also experienced a security breach. But the quality of communication and transparency that Binance offered cannot even be comparable to Cryptopia. First of all, you cannot even compare the involvement of Changpeng Zhao, the CEO of Binance, and Alan Booth the CEO of Cryptopia. Alan hasn’t tweeted since October 2018, and Cryptopia’s Twitter account isn’t a good example of communication as well. Binance ruled out multiple tweets a day, explaining everything and answering to almost everyone’s questions. But you sure can’t say that about Cryptopia! Since the announcement about liquidation, they have posted 3 tweets including the one with the announcement.

Funny enough, their CEO once in an interview to CoinCentral said:

“So, for us [Cryptopia], the first thing is trust. If people can’t trust your brand, and that means every part of it, you’re not going to succeed.”

It looks like they deliberately chose the path of not succeeding.

People are really frustrated.

Source:

https://support.cryptopia.co.nz/csm?id=kb_article&sys_id=20d84d54db69778084ed147a3a9619bc
https://www.cryptopia.co.nz
https://www.coingecko.com/en/exchanges/cryptopia?utm_content=cryptopia&utm_medium=search_exchange&utm_source=coingecko
https://coincentral.com/interview-cryptopia-alan-booth/
https://twitter.com/cryptopiaceo?lang=en

BREAKING: Binance HACKED!

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Yesterday, May 7, Binance, one of the largest cryptocurrency exchanges by trading volume, experienced a security breach. The exchange got hacked and the hackers got hold of approximately 7,070 BTC

Hackers Obtain User Data

Binance CEO Changpeng Zhao immediately did a report on Binance’s inside blog explaining that the hackers were able to obtain a large number of user API keys, 2FA codes, and other info. He stresses that hackers possibly used various techniques including phishing and virus attacks. Also, he claims that there might be several other techniques that hackers used in the hack. Moreover, there still might be additional user accounts that are affected.

It looks like the hackers used only one transaction in which they transferred the stolen 7,070 BTC. CZ says that the hackers only impacted their hot wallet storage which accounts for roughly 2% of the whole Binance BTC holdings. All other Binance’s wallets are safe and intact, says CZ.

Well-orchestrated actions and patience

CZ claims that the hackers had the patience to wait and execute “well-orchestrated actions through multiple independent accounts at the most opportune time”.

“The transaction is structured in a way that passed our existing security checks. It was unfortunate that we were not able to block this withdrawal before it was executed. Once executed, the withdrawal triggered various alarms in our system. We stopped all withdrawals immediately after that,” reads the report.

A few tweeters got hung up on the phrase “The transaction is structured in a way that passed our existing security checks…” speculating that this might be an inside job.

Binance will use the SAFU fund to cover losses

On July 3, 2018, Binance announced its Secure Asset Fund for Users (SAFU). Binance developed this in order to offer future protection of interests of all Binance users. Binance allocates 10% of all trading fees to this fund.

However, many industry professionals and projects which are related to Binance have shown support for Binance, by offering to pay the 7,070 BTC to Binance. For example, Justing Sun, the CEO of TRON, offered personally to deposit 7000 BTC on Binance to purchase BTC, BNB, TRX, and BTT. A few tweeters interpreted this as “openly admitting to market manipulation”.

Nevertheless, Binance will lock all deposits and withdrawals for a whole week. The reason being a thorough security review. CZ says that they have to go through their systems and data “which is large”. However, trading will still be live.

Suggestion to “rollback” Bitcoin

In the early hours of this incident, Jeremy Rubin (@JeremyRubin) suggested CZ to rollback Bitcoin, in order to recover the lost funds.

CZ did a livestream explaining everything what had happened and in this livestream he discussed the “rollback” option.

Udi Wertheimer in his Twitter profile conducted a thread where he explains why this is an outright nonsense.

He says that this would cost more than the actual hack and could potentially lead to more huge transactions at risk of being double-spent. Also, many other exchanges might be impacted and this could “hurt” the Bitcoin credibility. Wertheimer explains that a day of mining costs 1,800 BTC. Most importantly he said that “this is no Binance chain with CZ signing all the blocks”. By actually trying to rollback Bitcoin, many miners would be affected and the whole Bitcoin ecosystem in general. However, CZ from Binance dismissed this idea rather quickly.

BitMex Research Twitter profile posted a 2016 Reddit thread where a rollback was discussed when hackers stole around 120,000 BTC from Bitfinex. In this thread users comment on the potential negative consequences. 

Wertheimer also reminded that previously Binance had stated that holding assets on their exchange is as safe as being in possession of ones own keys. Now we see that this statement is ridiculous and you should never store your assets entirely on an exchange. Even “SAFU” won’t help. 

Source:

https://www.binance.com/en/support/articles/360028031711
https://www.binance.vision/glossary/secure-asset-fund-for-users

Photo by Flickr

Previously Hacked Crypto Exchange Zaif Resumes Their Services.

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A Japanese cryptocurrency exchange Zaif, which was previously hacked for about $60 million, resumes operating on their services. Last year September 19, the hackers stole $60 million in BTC, BCH, and MONA with unauthorized access to the exchange’s cold wallets. The good thing is that the company had its own asset reserve of around $20 million. They made an agreement with a Japan investment company called Fisco to receive a $44.5 million investment in exchange for a large share of ownership.

Zaif Changes Owners

Based on the previously mentioned investment by Fisco, this Monday, April 22, Zaif officially signed over its business to Fisco. During all this time since the hack in September 2018, the exchange’s services (trading, depositing, withdrawing, and registering) weren’t operating. Now everything is back up and running. The new owners reinstated all services on Tuesday, April 23. However, while previously the company’s owners said that the investment from Fisco will be in exchange for a large share of the company, now it sounds like they are handing it over completely.

Refunds Users Lost Funds

As mentioned before, Zaif had an asset reserve of $20 million which they dedicated to refund its users. Fisco added their part of $44.5 million. The company explains that all the BTC and BCH holders have received their funds back. However, users who held MONA received only about 60% back in crypto. The rest of the compensation consisted of Japanese Yen at the rate of 144.548 yen per MONA.

Source:

https://www.coindesk.com/hacked-crypto-exchange-zaif-resuming-full-services-under-new-owner
https://corp.zaif.jp/info/10789/

Photo by Zaif.jp

Bithumb, Leading Korean Exchange, Hacked Again?!

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Just recently, on March 30, 2019, Bithumb saw yet another cyber attack. It appears that the exchange is hacked and unofficial information says that around 3 million EOS are stolen.

Bithumb temporary pauses Withdrawals and Deposits

The exchange started communicating to its followers on Twitter, saying that they apologize to their users for delaying deposit and withdraw services. Also, they wanted to inform about the “circumstances” of the grounds and informed that users’ funds are safe.

However, it appears that the hacker transferred 3,1 million EOS out of their hot storage within 16 transactions, says the unofficial source.

The first transactions from the Hacker.

Moreover, it looks like not only EOS is the victim, the same unofficial source claims that more than 20 million XRP is on the line as well!

This is the Bithumb EOS account (g4ydomrxhege), which suffered the attack.

The remaining balance is transferred out of the wallet and into the Bithumb cold wallet (bithumbshiny).

The second major Bithumb hack

Bithumb has suffered from hackers almost exactly a year ago as well. Only that time the losses were much more significant. Bithumb reportedly lost around $31 million, but managed to recover $14 million during the investigation. Many tweeters say that this incident is almost ridiculous, and Bithumb hasn’t learned anything from the previous hacks.

Also, another thing which a lot of people note is that this time EOS won’t be able to help/freeze the transactions because now it is too late. The hacked disposed the stolen EOS via ChangeNow, a non-custodial cryptocurrency swap platform that does not require KYC from it’s customers.

Additionally, according to this issue, many people now have found out that Bithumb kept $15 million worth of cryptocurrency in a single wallet. Many seem to question this kind of action.

The entire timeline

A Twitter user @DoveyWan has collected the entire timeline on how the situation escalated.

(SGT time-zone)

  • On 3/29 at 9:40 AM – Hacker account ifguz3chmamg was created via accountcreat 
  • 3/29 9 to 11 PM– Bithumb wallet g4ydomrxhege has been transferred out 3,132,672 EOS to the hacker account, total 16 transactions
  • 3/29 post 11 PM – the hacker has been disposing stolen EOS via ChangeNow to downstream exchanges including Huobi, Kucoin, the distribution is still on-going 
  • 3/30 midnight, Bithumb started to transfer remaining balance of g4ydomrxhege/new deposit into its cold wallet bithumbshiny.

Also, the user has created a complex chart explaining the fund flow analysis.

We will update the article as the situation unfolds.

Source:

https://twitter.com/DoveyWan/status/1111839155380801536
https://cafe.bithumb.com/view/board-contents/1640037
https://twitter.com/BithumbOfficial/status/1111877947592310785

Photo by Soumil Kumar from Pexels

Cryptopia hack continues!

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Recent news show that the Cryptopia hack is continuing to cash out Ethereum. Previously we reported that Cryptopia encountered a security breach which resulted in $16 million worth of Ethereum stolen. Since then Cryptopia closed their website, as this is notified to government instances. 

New Zealand police comments

Since the previous hack, New Zealand police is working on solving the crime. They are in talks with Cryptopia, to gain further understanding. “A dedicated investigation team is being established in Christchurch including specialist police staff with expertise in this area. Police are also liaising with relevant partner agencies in New Zealand and overseas,” says in the report.

Hacker continues to steal funds

Toady, judging by recent reports, the hacker stole a little more than 1,675 ETH. These funds, from around 17,000 Cryptopia user wallets, the hacker sent to these addresses. Among these 17k addresses were around 2k wallets that featured in the previous hack. Also, it included 5,000 wallets which users’ had even topped up since the previous theft.

These funds are sent back and forth using the aforementioned addresses, and now the address with most funds is “Cryptopia_Hack2” with 30,789 ETH. As you can see these addresses are flagged by etherscan.io.

Cryptopia no longer has control of their Ethereum wallets

It seems apparent that the hacker or group of hackers now have full control of Cryptopia’s Ethereum wallets.

They can operate at free will with the funds. A Twitter user @notsofast says that Cryptopia have to rebuild the entire hot/cold wallet system before recovering the rest of system’s assets.
Also, in January 28th, they tweeted this image:

Image from Cryptopia’s twitter

Users still depositing funds

Signs of users still depositing funds within the Cryptopia wallets happened just two hours after the second hack. <- Tweet this!
Elementus, a universal Blockchain query engine, reports that these funds are coming from mining pools. Probably these users forgot that they have a designated mining address, where all the mining payments go straight to Cryptopia.

Let’s hope that Cryptopia solves this issue with private keys. Moreover, Cryptopia hasn’t communicated today about the second security breach.

Source:

https://elementus.io/blog/cryptopia-hacker-strikes-again-15-days-later/
https://cointelegraph.com/news/report-new-zealand-cryptopia-exchange-hack-continues
https://ambcrypto.com/cryptopia-compromised-in-another-attack-by-hackers-loses-180k-worth-of-ethereum-eth/
http://www.police.govt.nz/news/release/investigation-involving-crypto-currency-company

Photo by Pexels.com

Cryptopia Hacked! Significant Losses!

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Today, January 15th, Cryptopia, a New Zealand altcoin exchange, came out with an announcement that yesterday January 14th, they experienced a security breach. This breach resulted in significant losses they claim. They haven’t yet specified how much has the exchange lost. 

Website closed

Cryptopia home page

Since they noticed this unusual activity they put the website in “maintenance mode”. They noted that they will keep it that way, with trading suspended, until they resolve the issue. Also, the staff notified all the appropriate government instances such as NZ Police and high tech crimes unit.

The Cryptopia Exchange

Cryptopia is known as the altcoin paradise back in the day, but since Binance now is the undefeated leader, and legally a better choice, a lot of traders have moved away from the altcoin exchange to Binance. When looking at coinmarketcap or coingecko, of course, the last 24h volume is 0, because the exchange is down at the moment. However, Cryptopia has lots and lots of markets, in which the expected volume is close to zero. Coinmarketcap says that Cryptopia has around 836 markets, but the last 300 or so are with no volume.

Markets within Cryptopia. Source: coinmarketcap.com

WhalePanda on Twitter pointed out that this is rather weird that this is happening during a bear market. Cryptopia has long lost its altcoin exchange title, and now is basically trying to stay alive. There are some rumors flying around, saying that the theft could be around $2,5 million, but when looking at their recent market volumes, those numbers just do not line up. Only if they had a cold storage where they held all the investors’ funds, which doesn’t seem likely.

Also, this is the first hack of 2019

Source:

https://goo.gl/U2XcDh
https://coinmarketcap.com/exchanges/cryptopia/

Photo taken from Pexels.com

XEM flying today! CoinCheck resumes operations with XEM, LSK and ETH

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CoinCheck is the leading cryptocurrency exchange in Asia, just recently announced that they had resumed deposits, withdrawals, and purchases of XEM, LSK, and ETH. That has resulted in more than 20% price increase for NEM in just two hours! LISK sees slight price improvements as well. That is all due to the hack which CoinCheck experienced earlier this year. 

The biggest theft in the history

The CoinCheck hack is rumored to be one of the biggest hacks in the world. Due to this hack, CoinCheck lost around 523 million XEM coins, which was worth around $534 million. Thus far, Mt Gox hack was the leader in cryptocurrency related thefts. During the Mt. Gox craze, approximately 850,000 BTC were stolen, which was around $473 million at that time.

Interesting facts about the CoinCheck hack are that only NEM tokens were stolen. Those stolen tokens were held on a hot wallet which private key was stolen. All that money belonged to the customers of CoinCheck. After that, CoinCheck didn’t file for bankruptcy and intended to pay back the stolen funds to its customers.

XEM returns to CoinCheck

It looks like the dust has settled and CoinCheck has recovered from its nightmare. Just recently they announced that they are reinstating operations with the cryptocurrency. NEM or New Economy Movement is very popular in Japan, and people are taking this news up very well. The price of XEM exploded almost +20% in the past few hours, but now its already seeing a slight pullback.

They started the payback process during March, this year and it looks like it all has gone smoothly.

Has CoinCheck improved their security measures?

It seems quite odd that this kind of news brings in a lot of hype for the specific token – NEM. NEM was the only token involved in the CoinCheck hack, and it was the single token which was stored in a hot wallet rather than a secure multi-sig wallet. So it seems entirely unclear for me to understand the logic behind this market movement. Many seem to take advantage of the news by trading the token on Binance and Zaif instead. Also, CoinCheck has received an increase in XEM volume. However, that doesn’t answer the question. People have received refunds, and their experience within the exchange has been very frustrating. So why would they ever return to an exchange like that? It could be because CoinCheck is the Coinbase of Japan. It is extremely popular, and users aren’t willing to settle for an alternative.

About NEM

NEM is a highly versatile crypto solution which seeks to adhere to a host of mainstream industry requirements. It is written in Java and JavaScript with 100% original source code. NEM has a stated goal of a wide distribution model and has introduced new features in blockchain technology in its proof-of-importance (POI) algorithm. NEM also features an integrated P2P secure and encrypted messaging system, multisignature accounts and an Eigentrust++ reputation system.

Source:

https://goo.gl/C9eFMw
https://goo.gl/FZXM1Z
https://goo.gl/xeCHpa
https://goo.gl/zaTPsN
https://goo.gl/vxYj9n
https://goo.gl/gsxCqG

Photo by Akil Mazumder from Pexels

Canadian crypto exchange ‘MapleChange’ hacked!

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Yesterday, October 28, a Canadian cryptocurrency exchange ”MapleChange” announced on Twitter that they have been hacked, and currently their website is down. 

“Due to a bug, some people have managed to withdraw all the funds from our exchange. We are in the process of a thorough investigation for this. We are extremely sorry that it has to come to end like this. Until the investigation is over, we cannot refund anything,” reads the original tweet.

Later, they opened a Discord server where users could post their losses. The total amount of assets hacked still remain unconfirmed.

Closing social media

Later, they came out with an another, rather suspicious announcement saying that they are closing all their social media platforms: “Because we have no more funds to pay anyone back, the exchange has to close down unfortunately. This includes all of our social media.” This has raised a lot of uncertainty within the followers of the exchange. They accuse the exchange of forming an “exit scam”, but later they came out with yet another tweet clarifying that “We have not disappeared guys. We simply turned off our accounts temporarily to think this solution through. We cannot refund everyone all their funds, but we will be opening wallets to whatever we have left so people can (hopefully) withdraw their funds.”

Refunds

The fact itself is that they have announced that they will not be able to refund any BTC or LTC funds, but they have been able to recover LMO (Lumeneo) and CCX (Conceal) token wallets which are being sent over to their coin developers. These two assets couldn’t be found on the CoinMarketCap website, but we were successful searching them on CoinGecko. Also, LMO and CCX were the top two assets with the most volume traded on the exchange, so those are good news.

The exchange itself had almost 2000 twitter followers and the day before the hack, it reported a $15k daily trading volume. Which is another factor which makes us lean towards the exit scam theory. The exchange saw a slight increase in volume during the day before the hack. It went from $5k to $17.5k in the matter of an hour, so it looks rather artificial because that was the highest traffic MapleChange had seen in the past 6 months.

The good the bad and the ugly.

The good news are that it looks like the main funds (LMO and CCX) with which the users of the exchange have been trading with, will be refunded and that the exchange’s communication with the customers appears to be back and running.

The bad news are that, yet again this is another low level exchange that just got hacked. Which comes as another reminder to us all not to trade within centralized low level exchanges, which offer assets that are not even available on CoinMarketCap. These kind of exchanges need to be avoided at any means, because the crash of such a service is inevitable.

But then again, these people who engage with such exchanges, are aware that they are depositing their funds to a insecure source, just to get the “promised” x10 on a trade.

We strongly advise you not to use low volume level centralized exchanges, since they can easily go out of business, lock you funds or disappear just by announcing that they have been hacked.

Source:

https://goo.gl/GZKsUw
https://goo.gl/jsL1b5
https://goo.gl/ivf1Yt
https://goo.gl/5rFVVL

Photo by Canva.com

The second Japanese crypto exchange hacked this year!

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Yesterday, September 19th, one of the largest Japanese crypto exchanges Zaif was hacked, reports PRTimes in Japan. The hack started already on September 14th, when the exchange noticed an unusual outflow of funds on the platform around 17:00 PM, Japan time, after which the company halted the deposit and withdraw functions. 

Zaif is being operated by Tech Bureau and they explained that had investigated that the hackers had stolen around $60 million in BTC, BCH and MONA with unauthorized access to the exchange’s cold wallets. The exact amount of BCH still remain unknown.

The good thing is that Zaif had its own asset reserve of around $20 million, and they have made an agreement with a Japan company called Fisco to receive a $44.5 million investment in exchange for a large share of ownership. It looks like the users’ funds are going to be returned and are safe.

Tech Bureau said that they have already filed the hack to local authorities for further investigation.

Japans financial watchdog – Financial Services Agency (FSA), has launched a wide range of inspections over native crypto exchanges about their security measures.

And interestingly enough, Tech Bureau had already been warned by the FSA in March, on improving its security and anti-money laundering measures.

Japan had experienced another large hack this year in January. A company called Coincheck reported that an impressive amount of $520 million in NEM tokens had been stolen.

These kind of hacks happen pretty often in the crypto ecosystem, and by now, no-one is protected unless the exchanges are properly regulated and secured by governing instances. It would be highly recommended to stick with the most popular crypto exchanges, and not to trade in the low volume ones. It might seem tempting as the lower class exchanges are offering more tokens and coins with small volume, with the option on arbitraging some assets. But if you highly value your investments and assets then we recommend to avoid these low class exchanges.

Source:

https://goo.gl/F3LKQR
https://goo.gl/g3PzWC

Bancor hacked and lost around $13.5 million

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In a recent tweet from Bancor, they claimed a security breach in their system. The details on the breach are still being investigated. 
First, they tweeted that their Web App is down, and then came the security breach tweet. 
“To complete the investigation, we have moved to maintenance and will be releasing a more detailed report shortly. We look forward to being back online as soon as possible” said their spokesperson. 
They were able to block the transfer of around 2.5 million BNT tokens(worth around $10 million), but weren’t able to do so with 25k ETH tokens(~$12.5 million) as well as 230 million NPXS tokens (worth around $1 million). Once the theft was identified, they were able to freeze the stolen BNT. So to sum it all up, they lost around $13,5 million. 
“We expect Bancor to go back online in the next 24 hours. We will continue to post updates as and when appropriate on our Telegram channel and on Twitter” said their head of communications Nate Hindman. 
Bancor emphasized the fact that no user wallets were compromised in the attack. 
Bancor is a decentralized liquidity network that allows you to hold any token and convert it to any other token in the network, with no counter party, at an automatically calculated price, using a simple web wallet.

Source:
https://twitter.com/Bancor
https://goo.gl/zNebCW
https://goo.gl/aqPLmk