Blockchain Security Breach News: CoinDash ICO Hacked, Loses $7 Million in Ethereum
A hacker successfully stole $7 million in virtual currency from the Israeli blockchain startup CoinDash during its Initial Coin Offering (ICO).
An ICO is an event where investors exchange cryptocurrency tokens (CDT) to fund apps or projects. According to CNBC, the hackers took advantage of this by instructing visitors to send their ethereum to another address in order to participate in the event.
The address was, of course, that of the hacker and is not affiliated with CoinDash so the ethereum that was sent in went straight to the hacker's virtual pocket.
It took minutes before CoinDash realized what was going on and immediately warned investors the minute they did. However, millions of ethereum have already been exchanged — $7.4 million to be exact.
CoinDash promises to provide the CDTs investors lost during the hack prior to the site's shutdown. The company emphasized that anything sent beyond that will not be returned. Their statement reads:
This was a damaging event to both our contributors and our company but it is surely not the end of our project. We are looking into the security breach and will update you all as soon as possible about the findings.
The hack raises the question of not only CoinDash's security, but also the future of the coin market. Users on Twitter and Reddit blew up after the incident, with many frustrated and others convinced CoinDash is over.
With ICO a relatively new business model, a definite protection for investors is yet to be perfected. Inbitcoin CEO Marco Amadori told IB Times that while it is a "powerful tool," it is "so easy to do like a ponzi scheme concealed as an ICO."
In an interview with Bloomberg, former Ethereum CEO Charles Hoskinson described the cryptocurrency scene as "a ticking time-bomb."
"There's an over-tokenization of things as companies are issuing tokens when the same tasks can be achieved with existing blockchains. People are blinded by fast and easy money," he said.
At the moment, there is no word yet on the identity of the hacker.
