Although exchange hacks have become a common event inside the cryptocurrency community, the breach of Bancor sparked some of the greatest controversies of any recent incident. This is mostly because Bancor claims to be a decentralized exchange, yet some of the actions we’ve seen in response to the compromise suggest that it is more centralized than it appears.
Bancor’s head of growth, Omri Cohen, defended the exchange’s position in an interview with Finance Magnates, saying that smart contracts—not users’ wallets—were stolen from in the breach.
“A Bancor wallet was broken into, and that wallet had access to certain smart contracts. Some tokens were stolen from those smart contracts on the network, totaling about $23.5 million. We can’t really speak to the details of the investigation while they’re being reviewed,” Cohen said.
By saying this, he confirmed that a full-scale criminal investigation is underway with regard to the losses suffered by Bancor. However, he failed to provide details on what law enforcement agency was looking into the matter.
Cohen later explained that although Bancor’s smart contracts may be a central point of failure, its user wallets are “fully on-chain and fully decentralized.”
“Not a single user wallet was broken into. There was no breach. It was just the smart contracts,” he added.
Cohen was careful not to say that Bancor is fully decentralized, however. During the interview, he even chose to point at the DAO attack on the Ethereum network, which would have resulted in the loss of $150 million.
A quick hard fork of the network helped prevent the completion of the theft. The older version of the network remained in what we now know as Ethereum Classic.
There’s a difference, though, in how Bancor handled its compromise and how Ethereum handled the DAO attack. Ethereum did not freeze Ether in the network.
In addition to this, the community may very well have chosen to stick to Ethereum Classic and leave behind the fork if they did not consider it worthy of their investment. Ultimately, the nodes voted and Ethereum split off successfully.
The fact that such a thing is not possible on Bancor makes it slightly more centralized than Ethereum, at least in this particular respect. Cohen doesn’t seem to find a problem with this, though.
For him, “the integrity of the Bancor network is more important” than debates over decentralization.
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