Losses from Bancor Security Breach Reach $23.5M
The decentralized cryptocurrency trading platform has frozen the stolen BNT tokens, but cannot recover the Ethereum and PundiX (NPXS) tokens withdrawn through a compromised wallet.
The Bancor platform, one of the major decentralized exchanges for new coins and tokens, has revealed the effect of the security breach it experienced on Monday. The Ethereum stolen is worth some $12.5 million. An additional $1 million worth of PundiX (NPXS) tokens were taken away, as well as $10 million in Bancor (BNT) tokens, which were later frozen, Bancor said in its official Twitter account.
The dollar tag of the hack is relatively modest compared to larger exchange hacks. However, Bancor is facing a steep decline not only of its market price, but also its reputation. For many new ICO arrivals and new coins, the price discovery mechanism of Bancor was crucial to survive.
User funds, however, are safe, and there are no other known exploits of wallets or smart contracts, Bancor claims.
The market price of Bancor Network Token has dropped more than 20% since it reported the security breach to $2.40 on Tuesday morning (UTC). This is mainly due to the fact that the BNT token is mostly traded within the Bancor ecosystem, with very slim volumes and low activity on Binance, OKEx, and other major Asian exchanges.
Now, trading on the Bancor platform is frozen, and this might be affecting the price of a handful of niche tokens, which have few other mechanisms for price discovery.
User wallets are, in fact, still usable, as the decentralized exchange does not lock or hold any of the tokens.
“Bancor does not hold your assets. Your wallet and your funds are always safe, secure and under your possession on the blockchain at all times,” the currently under-maintenance Bancor website reads.
The Bancor hack came just hours after Vitalik Buterin, co-founder of Ethereum, praised decentralized exchanges as a superior solution. Centralized marketplaces have seen funds stolen from their wallets where they aggregate user holdings - but even for decentralized exchanges, in-browser private key theft or smart contract exploits are possible.
The Bancor token freeze was a known feature, but it was seen in action for the first time. The ability of teams and governance bodies to freeze funds has worried the crypto community, when it was observed a few days ago in the EOS account freeze.