Hacks and Takedowns

Hacks

The crypto-drama continues. Parity, a popular Ethereum browser based wallet platform was hacked this week.  After news of the hack came out, a white hat hacker group or “the good guys” replayed the same hack and drained most of the other funds in users’ wallets to protect users from further hacks from the black hat hackers or “bad guys”. This same sort of white hat on black hat hacking technique was used during the infamous DAO hack in 2016. Some of the different tokens effected by this hack were, Edgeless Casino, Aeternity, and Swarm City.

Another project called Veritaseum, a cryptocurrency called VERI, was hacked according to their team. Not sure if this was a real hack or someone on their team absconding with funds because details are few and not much information has come out yet.

Last, but not least, CoinDash, a crypto based social trading platform was also reportedly hacked. This time it seemed to happen during the crowd sale itself.  The team posted a link for possible refunds for those affected.

These hacks are just the most recent wave of ICO rockets to blow up on the launchpad as I mentioned in this video last month. I believe these will be opportunities to make the Ethereum platform better, but it will come at the expense of some user’s funds. These are the risks with bleeding edge, brand new technologies. Someone who has an even more bleak outlook on the future of Ethereum and ICOs in particular is former Ethereum developer Charles Hoskinson. He recently stated that ICOs coming out of the Ethereum platform are a ticking time bombs. Some of his arguments seem to be regulatory as well as technical in nature. Whether Ethereum and the entirety of its corresponding ICO ecosystem will prevail and get stronger, or crash and burn in a heap of high profile hacks remains to be seen. My bet is on Ethereum’s survival and continued dominance in the smart contract arena.

 

Takedowns

This week was a buzz with high profile takedowns as well as  arrests for operators of  exchanges in the cryptocurrency space. We will start off with AlphaBay and Hanza. Both of these exchanges operate on what is known as the deep web or dark web as some people call it. Basically, you just run a Tor browser so you can access their urls which are most of the times .onions. After that you will most likely need to go through a mildly annoying but not too difficult request or referral sequence. After that you will be given the url to a login page where you create an account. It is not illegal to download Tor and create accounts on most of these sites. Not that I have ever done this just out of curiosity… AlphaBay’s admin, Alexandre Cazes was arrested in Thailand where he later committed suicide in his jail cell. At the time of his arrest, AlphaBay was the largest known dark market. With Hanza market the Dutch authorities were able to infiltrate accounts where users were not using two factor authentication and used the same password with multiple accounts according to this article. It is unclear whether any arrests have been made in connection with the Hanza market takedown.

Now for the bigger takedown news story that may shed some light on the high profile Mt.Gox hack in 2013. Alexander Vinnik, a man now believed to be the admin of the mysterious Russian exchange BTC-E, has been arrested in Greece this week. It is now believed that Vinnik was involved in laundering some 4 billion dollars worth of BTC, the same BTC investigators believe may have been the missing BTC from the Mt.Gox hack in 2013. If this is true WizSec, a bitcoin security specialists team associated with the investigation of the Mt.Gox hack, believes they may have found the Mt.Gox hacker. This is huge news that would bring the biggest BTC hack in history to a close.

 

SEC

The U.S. Securities and Exchange Commission, SEC is a government agency that most of us have not asked to come protect us from our investment choices in this space. But here they are to “protect” us from ourselves. This week the SEC moved to put out a message that it is their belief that last year’s Ethereum based crowdfunding sale forever known as the DAO was a security and thus subject to the federal securities laws. Venture capitalist, Tim Draper urged the SEC to reconsider and at the very least grandfather in the ICOs that have taken place thus far. The way I see it, we will most likely now see even more ICO offerings that will not be available to US residents. While this ruling most likely affects the now defunct DAO crowdsale, this will not necessarily be the case with other ICOs. It really depends on what they are offering. But I still think it will effect non accedited US investors which is most people in the US. For most of us, many of these ICOs will now not be available to invest in.

 

BCC

This week’s big scaling news goes to BCC or Bitcoin Cash, which is also known as Bitcoin ABC. I put out a video explaining the potential rollout of BCC on Aug 1st in a video I did last week. Bitmain, one of the biggest players thought to be behind BCC seems to be all for BCC while also distancing themselves from it as well. This is probably just politics and trying to play it safe on their part. Bitcoin Cash does seem to be picking up steam at the moment with hashing power as well as node count going up showing support for the currency as well as the network. While this currency does seem to be growing legs as well as creating anxiety for pro BTC folks, one should not be so scared. BCC will fork with repay protection, so users of BTC will also have the same balance on the BCC chain after the split. Many people seem to think that BCC will just be a free money gift for them to quickly sell and buy back in BTC with but I am not so certain. I will most likely hold both. I believe that the people behind BCC are most likely well funded as well as supported on a developer level. I think if we see a BCC hard fork after Aug 1st, it will be a currency that may live on for a long time. It may go way down in price for a while and then slowly build itself back up in a couple of years much like when we saw ETC fork off from ETH. I bought ETC when it was 1 dollar a piece and just waited. Now I am glad I did. Many people at the time declared ETC dead because it was much smaller than ETH. It’s still alive today and probably will be again tomorrow. Something to think about. As a last reminder, some exchanges will not support the BCC chain. Coinbase is one of theses that WILL NOT give you a double balance of BCC. So to avoid this, now would be a good time to move your BTC to a hardware wallet or a paper wallet. Here is a tutorial for those that would like to set up a paper wallet.

 

and More

A couple quick noteworthy events…

  • Dash gets accepted on The App Store! This is big news for Dash in the long run. This is another reason of why I still hold DASH today and will keep holding some.
  • Coinbase not to accept ETC just yet. This is something I am going to watch closely. I think it’s only a matter of time before they do and if they do, this would be another great reason to keep holding ETC.

7 thoughts on “Hacks and Takedowns

  1. Brandon,
    It looks like Coinbase will cease all buying and selling of BTC on August 1st. If there is any sort of a crash, what would be a good way to buy in? Trade between cryptos?

    • Matt,
      Thats a great question! Even if Coinbase had started that they would be open for business on Aug 1st, I would bet you money they would not be operational anyway, as they have not been the last few times of high traffic. I’m guessing they know this, so they will just be closed Aug 1st, lol. To be honest this might cause high volatility for days after Aug 1st, so Aug 2nd might not be any better. Not telling how long this thing will take to settle down, maybe weeks, I have no idea. Also with altcoin such as LTC, DASH, ETH or really any of the others, I would expect higher volatility with these as well. So no telling what they will be worth, maybe much less, maybe much more, and quickly changing between both, who knows. I am thinking many people are thinking what you are thinking as well, so expect delays at best with Shapeshift.io. I will assume they will be jammed. They were the last 2 times I tried to participate in a shapeshift to buy into 2 ICOs. I think it will be a big mess with many of these services. To be honest the only thing I have faith in is probably an exchange like Bitfinex. I use Bitfinex to trade, they will support both BTC and BCC and you can buy/sell for USD instantly if there is enough liquidity. But having said that, I just moved my BTC from Bitfinex, but I may go back in at some smaller position, I dont know yet. But Bitfinex, Kraken, Bitstamp and the Chinese exchanges are the only things that seem to stay up and running during high stress times with option to trade USD or I guess in China CNY. Hope this helps!

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