Business 1 May 2018

Erik Gibbs

Coinsecure delays reimbursements following million-dollar hack

There’s a bit of bad news for some cryptocurrency investors in India. Coinsecure, a Delhi-based cryptocurrency exchange, has announced that expected reimbursements following a hack earlier this month will be delayed. The exchange didn’t provide an estimate of when the digital currency payments would finally make their way to the customers.

The theft of 438 Bitcoin (BTC), around $3 million, took place on April 9. In announcing the delay this past Sunday, the exchange said that it had anticipated beginning to hand out reimbursements last week, but cannot due to the ongoing investigation into the theft. Part of the announcement reads, “When investigations are underway, we don’t have much of a say and do need permissions from the authorities to start the compensation process, which we are yet to receive. We will update you when we have definite dates around the start of the process.”

The working theory is that the theft was an inside job and the main suspect is the company’s Chief Science Officer (CSO), Dr. Amitabh Saxena.  Coinbase CEO Mohit Kalra stated following the theft, “As the private keys are kept with Dr. Amitabh Saxena, we feel that he is making a false story to divert our attention and he might have a role to play in this entire incident. The incident reported by Dr. Amitabh Saxena does not seem convincing to us.”

Dr. Saxena reported the alleged theft to Kalra. Only Kalra and the CSO held the company’s private wallet keys. In the initial investigation, it was determined that the company’s keys had been exported online, ostensibly as Dr. Saxena was extracting Bitcoin Gold to distribute to the exchange’s customers. Since Kalra believes that Dr. Saxena is behind the theft, he asked police to seize his passport to prevent him from being able to leave the country.

Coinsecure has agreed to make full restitution if the BTC are recovered. If not, it will pay 10% of the stolen balances in BTC, with the balance being provided in rupees. Based on current market rates, users could lose as much as 35% of the BTC value if they receive partial payments in rupees. Coinsecure is currently shut down following the theft and pending results of the investigation.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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