Major cryptocurrency exchange suffers multi-million dollar hack

Photo (c) KeremYucel - Getty Images

One economist says cryptocurrency is no substitute for stocks and bonds – a cryptocurrency exchange app company – says it was the victim of a hack totaling $15 million in stolen funds.

In a statement, a Crypto spokesperson told ConsumerAffairs that the incident affected 483 customers and that the company prevented unauthorized withdrawals in the majority of cases. In all other cases, customers were fully reimbursed.

Breaking those 483 instances down into values, the company said the unsanctioned withdrawals totaled 4,836.26 ether, 443.93 bitcoins (BTC), and approximately $66,200 in other currencies.

To ensure a hack like this doesn’t affect users the next time one happens, the company said it has “hardened” its security systems and is introducing a program to offer additional protection and security for up to $250,000 in funds held in the app and exchange.

The company appears to be in solid enough financial shape to withstand the losses claimed by the hack. CEO Kris Marszalek recently told Fortune that the company's revenue surged 2,000% in the last 12 months. 

Security firm says not all funds are safe

Peckshield, a China-based blockchain security firm, questioned’s stance that only $66,000 USD was stolen, claiming that its analysis shows that the unauthorized withdrawals amounted to $33 million.

"I’m sorry, but all funds are not safe. I had BTC withdrawn from my account that I did not authorize," tweeted J8Arnold, one of Crypto’s customers. "These funds have yet to be returned to me… I have always had passcode & 2FA [two-factor authentication, a method for protecting identity theft] enabled. I have reached out to Customer Support using every channel possible with no response."

ConsumerAffairs asked Crypto to speak directly to Peckshield’s claims, but the company has not yet replied.

Shaky ground?

While protections are improving for cryptocurrency investors, the digital money world is still in its "Wild West" phase and is not yet completely under the same regulations that the Securities and Exchange Commission (SEC) requires other trading sectors to follow. That allows some wiggle room for hackers to continue trying to break into cryptocurrency exchanges whenever they can, forcing many investors into "buyer beware" mode.

Roger Aliaga-Díaz, Vanguard America’s Chief Economist, cautions investors that while cryptocurrency may seem attractive, it’s no substitute for stocks and bonds.

"The biggest risk for all investors would be to assume that demand growth will continue just because their prices have recently gone up," he said. "That's speculation, not investment."

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