It appears the Dogecoin ecosystem has been dealt a major blow a few hours ago. The very popular Dogetipbot has been taken offline and all user balances have been reset to zero. There are no funds left in the hot wallet for the time being, although the service may relaunch under a different owner in the future. The platform was not hacked, yet it appears the service operator has run into quite a few issues of his own.
A Major Setback for Dogetipbot and Dogecoin
Although very few people gave Dogecoin a fighting chance when the currency first launched, it has become quite a success story in the end. To spread the word about Dogecoin, someone created an official online tipbot. Anyone in the world could make use of the service through their Reddit account, which has been quite a successful solution over the past few years. Unfortunately, things have taken a turn for the worse, forcing the Dogetipbot owner to make some drastic changes.
To be more specific, all Dogetipbot user balances have been reset to zero. It does not matter how many coins were in the account prior to today, as no one can access any funds for now. That being said, the service owner has noted all usernames and their associated balances for future reference. It would have been impossible to let users redeem their balance anyway, as there are no funds left in the hot wallet whatsoever.
This is not due to a hacking or something like that, though. There is no external hot wallet breach in over 3.5 years of operations. Instead, it turns out the owner of the tipbot has run into some financial issues that ultimately led to this unfortunate turn of events. The service operator has been forced to make tough calls. The only potential option was to use the cold storage evidence to ensure the Dogetipbot could remain operational.
Some people may argue the owner could have raised money or even held an ICO. He tried the first idea – unsuccessfully – and the second option is impossible due to potential SEC repercussions. Cashing out cold storage was the only solution, and the owner set out to repurchase all sold coins once funding was secured. Sadly, that goal was never achieved, bringing us to where we are today.
Interestingly enough, the Dogetipbot still ran for two years, despite these financial problems. The owner used every crypto asset he had to convert them into Dogecoin. However, the recent price increase, a mounting number of crypto scams, and hacking attempts have caused the tipbot to bleed funds faster than it could be replenished. Just last week, the final withdrawal was made by someone who compromised a linked Reddit account. That was the proverbial final nail in the coffin for Dogetipbot.
Dogetipbot will remain active on Reddit, although the service is set to self-destruct in December of 2017. The source code will be made available on GitHub before that date, though. It is likely someone will pick up the code and run a new tipbot in the future. That is, assuming they can find the necessary funding to do so. The popularity of DOGE ultimately caused its popular tipbot to come to a premature end. A very sad day for cryptocurrency enthusiasts indeed.
Header image courtesy of Shutterstock