Police probe after digital break-in
Christchurch-based digital currency exchange Cryptopia was still offline for maintenance yesterday after a digital break-in — and industry talk of a $3.7 million heist.
At 7.55pm on Tuesday, Cryptopia tweeted it was down for unscheduled maintenance.
Shortly after, it elaborated in a tweet that “Yesterday, 14th January 2014, the Cryptopia Exchange suffered a security breach which resulted in significant losses”. The exchange did not put a figure on the hack, and sales manager Troy Russell said could not comment further while the matter was with the police.
But one industry expert pointed to crypto transaction monitoring services, including “Whale Alert,” which highlighted that US$2.5m ($3.7m) in a digital currency called Ethereum was transferred to an unknown wallet.
Authorities are in the early stages of investigating the incident.
Police said in a statement: “A significant value of crypto-currency may be involved and police are taking this very seriously.
“We are currently talking to the company to gain a further understanding of what has occurred.
“A dedicated investigation team is being established in Christchurch including specialist police staff with expertise in this area.”
Crypto exchanges are used to buy and sell digital currencies and have usually also offered the option to store coins online for users.
Cryptopia, founded three years ago by Christchurch men Rob “Hex” Dawson and Adam Clark, said it had grown from two to 50 staff in the year to January 2018 as the cryptocurrency craze hit its height.
The exchange trades a number of digital currencies including Bitcoin and Ethereum.
Ethereum is the most established of a crowded field of alternative virtual currencies to Bitcoin, and has experienced a similar crash in value. After soaring close to US$1500 in early 2018 one Ethereum “coin” is now worth around US$126.
Beyond the crash in value, cryptocurrencies have struggled with the fact that there is no wellestablished alternative to the deposit insurance or government guarantees that secure traditional bank accounts.
One commentator called the lack of deposit insurance the crypto industry’s “Achilles’ heel”.
Digital currencies have strong security measures built in, but there are several ways stage an online heist, including obtaining the login to a user’s account.
And while Cryptopia has the dubious distinction of being the first exchange to be targeted in 2019, online heists have been common over the past five years.