Bancor, an Israeli start-up, has been hacked of digital tokens and left poorer by at least $13.5 million.
Bancor confirmed that a part of its network had been compromised, leading to the hack.
Hackers made away with $12.5 million in Ethereum based coins and the remainder in a lesser known crypto-currency named Pundi X. The value of the hack could have been higher had it not been for Bancor's ability to freeze $10 million worth of BNT, its own crypto-currency flavour.
Apparently hackers were able to access a wallet on the platform and inserted a malicious code to steal the coins from Ethereum smart contracts.
Here is a tweet posted by Bancor that confirms the hack:
Here is the latest update on the recent security breach: pic.twitter.com/JroypFvBri— Bancor (@Bancor) July 9, 2018
Who and What is Bancor?
Launched in June 2017, the startup reaped $185 million, of which $153 million were mined within three hours via crowdfunding in the most successful Initial Coin Offerings (ICOs). The startup has been backed by a renowned billionaire investor Tim Draper. Bancor touts itself as being named after a supranational currency conceptualized by economists John Maynard Keynes and E. F. Schumacher. Keynes and Schumacher coined the term for a currency to be used in international trade post the second World War.
Bancor allows users to start their own tokens, and in fact enables selling any digital tokens, thereby referring to itself as a decentralized crypto-trading platform. Many are now questioning the exchange' decentralization characteristics, after this heist.
Charlie Lee, the creator of Litecoin, wrote on his Twitter:
A Bancor wallet got hacked and that wallet has the ability to steal coins out of their own smart contracts.— Charlie Lee [LTC?] (@SatoshiLite) July 10, 2018
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. https://t.co/22UYygIhEF
Both. Designed poorly and error in getting hacked.— Charlie Lee [LTC] (@SatoshiLite) July 10, 2018
How did the heist take place?
Bancor fell prey to an attack on July 9. And within hours, an official confirmation revealed that "a wallet used to upgrade some smart contracts was compromised." Bancor has assured that the services which were halted initially will resume soon. The platform has also shared that "no user wallets have been compromised in the attack."
Post this hack, the valuations of most volume traded crypto-currencies has slided in the past 24 hours. Bitcoin is down by 3.62% at $6404 per coin, Ethereum is down by 4.13% at $441, Pundi X down by 5.34% at $0.003 according to data from CoinMarketCap. BNT is trading 8.66% down at $2.22 per unit.
Crypto-currencies falling prey to hacks is nothing new. Japanese crypto exchange Coincheck was the latest casualty at the start of this year. Coincheck's hack reported at $530 million is one of the biggest losses for the industry. Previously the biggest loss was attributed to Mt Gox, an exchange platform that revealed $480 million worth bitcoins missing from its accounts.