Bancor loses $23.5 million worth of cryptocurrency due to a hack

Bancor was able to freeze some of the stolen tokens, but not all of them.

Image: Ulrich Baumgarten via Getty Images

Hackers attacked cryptocurrency exchange Bancor on Monday, compromising one of the company’s virtual wallets and stealing roughly $23.5 million worth of digital currencies.

According to Bancor, no user wallets have been compromised. The site has been taken down while the company is investigating the incident. 

“A wallet used to upgrade some smart contracts was compromised,” Bancor wrote in a statement published on Twitter. The compromised wallet was then used to withdraw 24,984 ETH (Ethereum) tokens, worth roughly $12.5 million and 229,356,645 NPXS (Pundi X) tokens worth roughly $1 million. The hackers also made away with 3,200,000 of Bancor’s own BNT tokens, worth approximately $10 million.  

Bancor said it was able to freeze the BNT tokens, thus mitigating the damage to its network, but was unable to freeze the other stolen tokens. The company said it was working with “dozens” of cryptocurrency exchanges to trace the stolen funds and make it harder for the hackers to liquidate them. 

Bancor calls itself a “decentralized liquidity network” and is different from your typical exchange as it has no order book. Instead, users can trade one cryptocurrency for another based on an algorithmically discovered price, while the liquidity is provided by Bancor’s “fractional reserve” system. The Israel-based company made headlines when it raised $153 million in less than three hours in June 2017, in one of the biggest ICOs (initial coin offerings) to date. 

This recent hack highlights some aspects of Bancor that were criticized in the past, most notably by researchers Emin Gün Sirer and Phil Daian, which questioned how decentralized the project really is. The researchers accused Bancor of being “essentially a central bank strategy” and a “market maker.” While Bancor’s users apparently haven’t lost money in the hack, Bancor itself lost a great deal of capital that fuels its liquidity pool, potentially threatening the integrity of the network. 

We’ve contacted Bancor for comment and will update this story when we hear from them.

The prices of all major cryptocurrencies have dropped significantly in the last 24 hours, with Bitcoin down 6%, to $6,389, and Ethereum down 10%, to $437, according to CoinMarketCap. The total market cap of all cryptocurrencies has shrunk to $253 billion, down from $273 billion just a day ago. 

Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH. The author does not own BNT or NPXS. 

Read more: https://mashable.com/2018/07/10/bancor-hacked/

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