Business 7 February 2019

Erik Gibbs

Cryptopia hackers liquidated stolen crypto mostly through EtherDelta

The hack of the New Zealand-based cryptocurrency exchange Cryptopia, that began in January, saw millions of dollars in digital assets stolen. While the Binance exchange reportedly was able to stop the thieves from laundering the funds through its exchange, another exchange has been the go-to destination for the majority of the funds, according to a report by blockchain data company Elementus.

In a post on Twitter from a few days ago, Elementus asserts that it was able to trace $3.2 million in stolen crypto through a number of exchanges. The majority of the funds were allegedly channeled through the EtherDelta exchange. 

The tweet reads, “Cryptopia update As of this morning, the hackers have liquidated $3.2m in tokens, with the bulk of that going to Etherdelta.”

This isn’t the first time that EtherDelta has been chosen as the favorite exchange of hackers. The platform was breached last year after an imposter was able to spoof its domain. 

In addition, the exchange has fallen out of favor with the U.S. Securities and Exchange Commission (SEC). Its founder, Zachary Coburn, was targeted by the commission in November 2018 for running an unlicensed securities exchange. At the time, the SEC’s Stephanie Avakian stated, “EtherDelta had both the user interface and underlying functionality of an online national securities exchange and was required to register with the SEC or qualify for an exemption.” Coburn didn’t admit any wrongdoing, but paid fines amounting to almost $400,000. 

While Elementus is following the digital money trails, New Zealand police are following their own trails. According to a report by New Zealand media outlet Scoop, Detective Inspector Greg Murton indicated that the investigation is “progressing well and advancing on several fronts.”

Murton adds, “The stolen cryptocurrency is being actively tracked by Police and specialists worldwide due to the nature of the cryptocurrency blockchains being publicly available.”

Cryptopia suspended operations when the hack was first discovered and then began to put everything back in place. However, it was reported by Elementus only two weeks later that the hack was still occurring, as the company was able to monitor several crypto movements that coincided with the initial hack. Cryptopia denied those allegations. 

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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