Finance

Bancor Hacked for $23 Million

Users' Funds are Safe

Since the dawn of the online cryptocurrency trading platforms, the issue of the security has been emphasized over and over by the users as well as government’s regulatory bodies.

The opinion that decentralized exchanges will help to solve the security problem was widely accepted, and many traders took their business to those platforms as they no longer needed to transfer their trading funds to some third party to trade.

Bancor is one such project. The company raised $153 million during the ICO phase in exchange for their BNT tokens, which was a record-breaking amount at the time. Analogically, the platform launch brought high hopes, but the security risks, which were already talked about, were recently exposed.

It was announced yesterday that the security flaw was used by hackers to breach the system and get away with $12.5 million in Ethereum (ETH), $1 million worth of PundiX (NPXS), as well as $10 million in Bancor (BNT) tokens.

According to the official announcement, as soon as the company revealed the nature of the coins stolen, they have frozen the stolen BNT tokens, which renders them useless unlike the Ethereum and PuniX, which can be further used.

Bancor under maintenance
Bancor under maintenance

However, one of the most important facts is that, due to the decentralized nature of the exchange, all users’ funds are safe, but the platform isn’t functional at the moment as the team is reportedly trying to figure out which part of their code, worth $153 million, was breached.

In the meantime, the community is burning with negativity which is mostly directed towards the development team’s ability to freeze the BNT tokens at will and the level of decentralization of the platform.

Twitter user @nic_carter explained what he sees as the ongoing problems with the system: “Decentralized exchange hacked, freeze funds, “ok guys could you please stop trading”, discretionary control over all BNT tokens, literally named after a Keynesian concept. Fantastic work guys.”

There are even some speculations about the centralized parts of the exchange being the “guilty party” for the attack, as the user @udiWertheimer resonated that “we don’t have all the details yet, but it sounds like the centralized backdoors in the contracts might’ve enabled the attack in the first place: “A wallet used to upgrade some smart contracts was compromised”. Too soon to tell though.”

So, if Not Users, Who Got Hurt?

It seems that the very system which Bancor developed, backfired on them, because, if the users’ funds are safe as the company claims, then the only victim can be – Bancor.

Once again, we will quote user @udiWertheimer who’s put up a legitimate set of questions: “Well Bancor got hurt from losing $12m of their funds? And Bancor investors probably got hurt too, because they gave Bancor $12m that the company can no longer use to generate returns?”

Of course, the hack affected all the BNT token holders indirectly, as the price of Bancor plummeted by 16% during the last 24 hours.

Vitalik Buterin recently called on the centralized exchanges for their business practices and types of systems, which was reported all across the media, but this turn of events showed us that not everything is a fairytale in the land of decentralization too.

Luka Kapetanic

An ex-restaurant business owner turned cryptocurrency fanatic, with over 12,000 followers on investfeed.com. Miner, Investor, trader and, above everything else - a writer, with coinlive.io, and cryptodigest.com in his jobs portfolio.

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