Attacks on crypto exchanges don’t seem to stop anytime soon. On Tuesday, the Singaporean Crypto Exchange DragonEx was attacked by hackers. The amount of funds lost is still undisclosed.
The company informed about the hack through its official Telegram channel, stating that a hack was reported on the exchange, on 24th March, altering authentications in Estonia, Thailand, Hong Kong, and Singapore. In its official statement, the team said that administrative authorities in the affected countries were informed about the attack, and the exchange is helping the police department to conduct an investigation.
The team further stated that all services on the exchange have been suspended until further notice and that DragonEx will take complete responsibility for the loss caused to users. The team will take a week to conduct an internal investigation and estimate the exact amount of funds lost in the hack.
This type of cyber attacks has become quite common, unfortunately, in the past several months. Some crypto exchanges across the globe have been facing such issues, with funds lost running in millions of dollars. For instance, the famous crypto exchange Coinbase reported a 51 percent attack against Ethereum Classic in January 2018, causing a loss of $1 million. In the same month, a hack on Japan-based Coincheck Exchange resulted in the loss of a staggering $530 million.
This is one of the major reasons why cryptocurrencies have been under the radar of regulatory authorities. For instance, the Reserve Bank of India released a circular, directing all the banks to refrain from serving businesses engaged in activities related to cryptocurrencies. The move resulted in huge losses for the crypto exchanges, with many forced to suspend their operations completely. Similarly, bans have been imposed on cryptocurrencies in many countries, and such incidents of hacks and cyber attacks will only worsen the situation.
The team at DragonEx has identified the stolen funds, and the accounts they have been sent to. Joanne Long, the administrator of the exchange’s Telegram account, stated that some of the funds stolen from the exchange were transferred to KYC enabled and heavily regulated exchanges like Bittrex. If DragonEx takes proactive action and essential measures, there’s a strong possibility that the stolen funds stored on Bittrex accounts can be recovered.
However, the same cannot be said about other exchanges. Nonetheless, the team has found other receiver accounts on different exchanges and is trying hard to get those funds back. DragonEx claims to be committed to taking full responsibility and has said that it would work tirelessly with authorities and other exchanges until every affected user gets his/her due compensation. However, 100% recovery doesn’t seem possible, as hackers usually send a big chunk of stolen many to different accounts, to hold them and move at a later stage, to avoid alarming the exchanges.
In spite of its commitment, the exchange hasn’t declared the number of funds stolen. And if it happens to be a big chunk of the corporate fund, DragonEx won’t be able to repay the users. The hack raises questions about the security systems put in place by the exchange. In fact, all the cryptocurrencies who have been attacked must seriously think of solutions, or take inspiration from exchanges like Binance, which have never been hacked.
If the crypto space has to survive, several improvements are required to make it more secure. Security has been one of the factors which made digital tokens so popular. However, hacks and cyber attacks have caused a loss of several hundred million dollars till date.
The crypto space had its worst period in 2018 when almost all cryptocurrencies kept bleeding. The market has shown signs of recovery since February this year, but incidents like these will discourage investments in digital assets.