Another cryptocurrency exchange has been the subject of a potential theft. This time around, the victim is IDAX, and its CEO is accused of stealing the private keys that allows access to customer funds.
IDAX: The Latest Victim of Crypto Thievery
If this doesn’t sound familiar, it should. The situation is basically a play on what happened earlier this year with Quadriga CX, the notorious cryptocurrency exchange in Canada that’s been responsible for the loss of roughly $200 million crypto funds. The head honcho of Quadriga – Gerald Cotten – passed away due to Chron’s Disease while working abroad in India.
Following reports of his death, it was revealed that Cotten was the only person in control of the keys that permitted access to customers’ money. This means that nobody with Quadriga could gain control of or withdraw their funds. Many customers turned to Cotten’s widow, claiming she could potentially open the door for everyone missing out, and when that didn’t work, a class-action suit followed.
The situation appeared rather grim and sad until it was suggested that Cotten may have embezzled customer funds prior to his unfortunate – and unexpected – passing.
These circumstances surrounding IDAX are a little different in that the CEO is still alive, but he is allegedly missing, and so is all the money he took. At this stage, no other staff member or executive with the exchange can lay claim to the money, nor have they been able to decipher where it’s being held.
IDAX is a relatively small cryptocurrency exchange when compared with enterprises like Kraken, Coinbase and Binance, though according to Coin Market Cap, the company did manage to oversee more than $500 million in daily bitcoin trades. At the time of writing, all future deposits and withdrawals have been paused.
What is it about cryptocurrency exchanges that seems to make them the perfect targets for crypto thieves and hackers? Is it their lagging security measures? Is it the fact that they oversee so many transactions that reading or pinpointing specific addresses is somehow difficult?
In the past, several exchanges have been hit, resulting in nearly $5 billion in losses according to a new report issued by cybersecurity firm Cipher Trace. Among the world’s biggest victims have been Mt. Gox and Coincheck, both of which are (or were) stationed in Japan. Mt. Gox lost well over $400 million in bitcoin funds, while Coincheck saw more than half-a-billion in crypto losses.
This Sounds Familiar
Just recently, popular South Korean cryptocurrency exchange Up Bit was hit with a hack that saw nearly $50 million in crypto funds disappear overnight.
In the case of IDAX, the funds stolen did not come from hot wallets but from cold storage, thereby implying that this was likely an inside job considering cold storage is usually harder to infiltrate.