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ChangeNOW Returns $1 Million Stolen During 2020 Eterbase Exchange Hack

Published 11/15/2021, 12:13 PM
Updated 11/15/2021, 12:30 PM
ChangeNOW Returns $1 Million Stolen During 2020 Eterbase Exchange Hack
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Who Was Hacked? Slovakia-based Eterbase, a European cryptocurrency exchange.

When Did the Hack Take Place? On September 8, 2020, Eterbase revealed it was hacked on the night of Sept 7, 2020. However, it is likely the hackers gained access to the exchange servers several hours or possibly even days prior to the funds being stolen to retrieve the private keys used to sign the outgoing transactions.

What Coins And How Much Was Stolen? The aggregated amount of the lost fund was approximately $5.4M across virtual assets consisting of Ethereum, several ERC20 assets, Tezos, Algorand, Ripple, Cosmos, Bitcoin, and other altcoins.

What Actions Did Eterbase Take? Eterbase said that it detected the attack but it was not able to block it. It reported the attack to law enforcement. The exchange entered maintenance mode on September 9, 2020 and has remained in the same state ever since. In April 2021, it said that it was forced to stop all its operations and asked its clients to withdraw all their funds. According to its statement as of October 14, 2021, Eterbase has officially entered the bankruptcy proceeding.

Why Did the Hack Take Place? The stolen cryptocurrency was stored in a hot wallet where the private keys are available in a database connected to the internet that did not require multiple signatures (multi-sig) by operators of the exchange to sign an outgoing transaction.

ChangeNOW’s advice (if needed): It is wise to store crypto in a cold wallet which may come in the form of a hardware device which is only plugged in when a transaction needs to take place. You would be better off keeping a large amount of cryptocurrency in a cold wallet if you have a lot of it.

How Did ChangeNOW Detect the Stolen Funds? On Sept 8, 2020, ChangeNOW received a request from the blacklisted address

to process the MATIC-BTC exchange equivalent to 600,000 MATIC.

What Actions Did ChangeNOW Take? It froze the funds. According to ChangeNOW’s Terms of Service (6.12), there’s a one-year period after the transaction was blocked for a legitimate owner to request a refund. In this particular case, there were no requests from Eterbase’s side, so when the terms started to run out, ChangeNOW initiated the conversation with Eterbase, reporting it had its missing funds.

In cooperation with the Slovak Police Department, the funds’ recipient was validated, and the 600,000 MATIC stolen was returned in an amount that has grown about 100 times over the past year.

What Happened Next? On November 12, 2021 after all the checks by the AML department were completed, the funds were returned to Eterbase.

Important Information The current exchange rate makes 600,000 MATIC worth more than $1 million. ChangeNOW has returned the amount in MATIC, not in its equivalent of about $10,000 a year ago.

A year ago, when the hacker tried to exchange 600,000 MATICs to BTC, 1 MATIC coin cost only about $0.02, and 600,000 MATIC were worth around $10,950. Today, the current MATIC price is approximately $1.73, which means that the same 600,000 MATIC are now worth a little more than $1 million.

“We at ChangeNOW have been pleased to assist in returning the stolen Polygon coins to Eterbase. Cryptocurrency heists are a big problem for the crypto community and we always try to help those who suffered from hacking. We seek a world where everyone can use crypto in a safe way; a world with no crime on the blockchain. This is one of the basic values we stick to, ” Mike Ermolaev, head of PR at ChangeNOW, shared.

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