Business 17 April 2018

Dennis Wafula

Coinsecure promises to refund customers—but in Indian rupees

Indian cryptocurrency exchange Coinsecure will pay back its customers affected by the $3.4 million heist involving SegWit-Coin BTC (also referred to as Bitcoin legacy or Core). The catch, however, is that the refunds will be made in Indian rupees.

Following the incident, there has been constant communication between Coinsecure and its users informing them of the progress made in the investigation. On its website, Coinsecure assured users that all the balances held in Indian rupees are 100% safe. However, the 438.318 SegWit-CoinBTC stolen have yet to be found. Coinsecure said they are still working with the authorities to track the missing cryptocurrencies.

The exchange also noted that it plans to pay back the users—though not in cryptocurrency. According to Coinsecure, refunds will be done depending on the outcome of the investigation. If the stolen SegWit-Coin BTC is found, users can claim the BTC holdings they held when the incident occurred. However, if the cryptocurrenciesare not found, customers will be refunded in Indian rupee (INR).

Coinsecure plans to use a lock rate system that will apply the rates on April 9, 2018.  Customers will receive 10% of the coin holding in SegWit-Coin BTC, while the remaining 90% will be refunded in INR. Customers of Coinsecure stand to lose more than 17 percent of the value in holding if the missing cryptocurrencies are not found. The coin was trading at $6,700 level last April 9, when the heist reportedly took place.

According to reports, the incident happened while the Coinsecure Chief Security Officer Dr. Amitabh Saxem was extracting the cryptocurrenciesfrom the vault. Coinsecure reported the incident to the Delhi Cybercrime Police, claiming that “The scenario outlined by Dr. Amitabh Saxena and the procedures explained did not follow thestandard protocol. For someone of Amitabh’s status being online when private keys were extracted, saving them in clear text format was unacceptable.”

Coinsecure also asked authorities to take away Saxem’s passport to prevent him from leaving the country. Investigations are still in progress with Coinsecure seeking help from the cryptocurrency community, users and people with useful information. They have issued abounty to the community to help them trace and recover the missing cryptocurrency.

Hacking cases in virtual currency exchanges have caused huge losses in the industry. Various exchanges have fallen victim to hacking, including Coincheck,which lost $500 million in 2018, NiceHash, which lost $64 million in 2017 and Bitfinex, which lost $72 million in 2016.

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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