Under Attack

Under Attack

Attacks concerning on wallets and cryptocurrency exchanges is becoming the standard of the industry. Everything is vulnerable — from huge market-monsters to new projects, and sometimes it seems that it is better not to trust anyone at all.

Let’s consider the most discussed cases.

Mizuho Bank, recently accused of creating transaction difficulties for MtGox’s customers, is stepping up its defense in the United States by using a rather unconventional argument which centers around its inaction and silence.

Let’s recall what the case is about. When MtGox’s head Mark Karpeles refused to close Mt. Gox’s account at Mizuho, the bank instituted a series of policies it kept secret from the public that were designed to frustrate Mizuho’s relationship with Mt. Gox. Thus, Mizuho limited and ultimately stopped processing international wire withdrawals from Mt.Gox’s Mizuho account. Mizuho, however, continued to accept international cash deposits into the Mt. Gox account.

In January 2014, plaintiff Joseph Lack, a resident of California, joined Mt. Gox. Upon joining, Lack wired $40,000 to Mt.Gox’s Mizuho account. Mizuho accepted the transfer and collected the transaction fee. On February 24, 2014, the website of the exchange went dark. Lack waited in vain for his deposit to appear in his Mt Gox account. He did not succeed in getting his money back.

The hacker's attack on the exchange NiceHash still does not give rest. The total cost of losses is not officially reported. Clients of the company managed to calculate the losses themselves. 4,736.42 BTC was stolen, which at current pricing equates to $67,867,781.

On May 7 2017, traders on Kraken lost more than $5 million: it suffered from an attack and couldn’t be accessed, according to a class-action lawsuit filed in Florida. During the incident, the suit alleges the exchange’s price of Ether went down for more than 70% and the traders’ leveraged positions were liquidated. They received no compensation. The exchange declined to comment on the lawsuit. In a court filing, it asked for the case to be dismissed and said the claims should be decided by arbitration.

Another two flash crashes occurred in 2017 on the U.S. exchange GDAX. The exchange said it compensated traders who lost money.

Not surprisingly, many banks are leery of cryptocurrency exchanges and some have refused to deal with them. At a bank investor conference this month in New York, Jamie Dimon, chief executive of JPMorgan Chase, called bitcoin ‘a fraud’ and predicted it will ‘blow up.’

Boycotts by banks can make it impossible at times for exchanges to process wire transfers that allow customers to buy or sell cryptocurrencies with traditional currencies, such as dollars or euros.

Dealing with the banks ‘is a constant and ongoing challenge,’ said Bitfinex Chief Executive Jean Louis van der Velde.

Instead of conclusion

Do not put all eggs in one basket: statistics show that a hacker attack is just a matter of time, and eventually, almost any resource can be threatened, regardless of its vastness and security.

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