Cryptocurrency security
News | 07/11/2018

$13.5 million worth of digital token stolen in Bancor, a Cryptocurrency start-up

About: Bancor’s one of the digital wallet was left exposed to cyber criminals due to an unforeseen vulnerability that was fully utilized by converting these smart contracts compatible with large sum of crypt-o-currencies and about 13.5 million USD were st...  Read More  

| News | $13.5 million worth of digital token stolen in Bancor, a Cryptocurrency start-up

Bancor, an- Israel based company that runs a  crypt-o-currency mining & exchange network that allows users to convert between two tokens like an exchange without involving any counterparty. The network allows all kinds of virtual coins to be bought and sold instantly.

A standard crypt-o-currency exchange involves exchange of tokens between two parties. A Bancor protocol in contrast works on an alternative trading mechanism that uses smart contracts to create smart tokens.

Smart Contract: A smart contract is a computer program that digitally facilitates, verifies, or enforces the negotiation or performance of a contract without involving third parties. These transactions can be tracked and are irreversible.

Smart Token: A smart token can be considered as a coin that holds the monetary value of other compatible virtual coins.For instance, it works on the same principle as of a central bank that holds foreign currency reserves and converts between them as required.

Smart tokens implement various formulas and algorithms to maintain the rate of conversion between various crypt-o-coins.

Recent news reveals that Israeli start up Bancor, a decentralized crypt-o-currency Exchange Company has fallen victim to a theft of up to 13.5 million USD.

The news was revealed on 9th July 2018 and states that the compromised data includes:

  • $12.5 million worth of ethereum and
  • $1 million worth of Pundi X, a lesser-known crypt-o-currency token.

Impact of  crypt-o-currency mining:

Within 24 hours of the attack

  • Value of Ethereum shed by 7.7%.
  • Pundi X value degraded by 15%.
  • Bancor’s Digital currency was down by 16.6%.
  • Bancor’s site is currently down citing maintenance reasons.

The company however claims that no user data was compromised and at the same time freezing the funds soon after the theft was identified enabled the company to prevent $10 million from being compromised.

Modus Operandi of the attack:

Smart contract are created with the unique id of the end computer and can be replicated, stored and controlled digitally by third party computers that run the block chain of crypt-o-currency. The reason for getting these smart contracts is to eliminate the middle men from any crypt o currency deal/conversion to avoid any known or unknown conflicts.

The place where these smart contracts are kept together in a secured manner is called a wallet. These digitally secured wallets have high end securities guiding the smart contracts placed inside.

They have become a preferred choice in recent past as the controlling entities can change the exact value as per the deal negotiated by the end users.

Bancor’s one of the digital wallet was left exposed to cyber criminals due to an unforeseen vulnerability that was fully utilized by converting these smart contracts compatible with large sum of crypt-o-currencies and about 13.5 million USD were stolen.

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