Altsbit plans exit after hack leaves cryptocurrency exchange out of pocket

Only a token amount of cryptocurrency was kept safe in cold wallets.
Written by Charlie Osborne, Contributing Writer

Cryptocurrency exchange Altsbit has claimed that a hack has led to the theft of a huge number of customer deposits including Bitcoin (BTC) and Ethereum (ETH). 

Last week, the Italian cryptocurrency trading post said that on February 5, an "attack by hackers" led to the theft of "almost all funds from BTC, ETH, ARRR, and VRSC," while a "small part" of customer funds were kept from reach as they were stored in cold wallets. 

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Hot wallets are intended for use to facilitate the real-time exchange of cryptocurrency, but as they are Internet-accessible, they are not recommended as a permanent storage system. Instead, the majority of funds should be kept in isolated cold wallets -- a practice that Altsbit did not appear to implement. 

Analysis of the lost funds is still ongoing. In an update, the exchange revised its thoughts concerning the cold wallets and said that a "good part" of funds were kept away from Internet-facing systems -- but losses still appear to be extreme.

At the time of writing, Altsbit says that that the verified losses are as below:

  • Bitcoin (BTC): 6,929 coins out of 14,782
  • Ethereum (ETH): 23,210 coins out of 32,262
  • Pirate Coin (ARRR): 3924082 coins out of 9619754 
  • Verus (VRSC): 414154 coins out of 852726
  • Komodo (KMD): 1066 coins out of 48015

Altsbit says that 7,853 BTC, or 53.1 percent, will be returned to users, alongside 9,052 ETH (28.06 percent), 5695672 ARRR (59.2 percent), 438572 VRSC (51.24 percent), and 46949 KMD (97.77 percent).

Users must request a refund -- which will only be partial -- through the Altsbit website. After logging in, users click "funding," "withdraw," and then they must fill in the address and amount requested. A verification email or 2FA code must be accepted before a withdrawal can take place. 

Withdrawals are being manually dealt with by Altsbit employees from February 10 to May 8, 2020. The cryptocurrency says that after the deadline passes, "the Altsbit platform will be terminated." 

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It is not known who is behind the alleged cyberattack and no information has been provided. 

As Altsbit says the platform will be closed down in the coming months, some users on social media platforms have raised the possibility that the alleged "hack" is an exit scam. 

Exit scams are inside jobs, also known as cashing out, in which cryptocurrency exchanges either close down without warning or claim that a cyberattack has led to the loss of user funds -- while operators walk away with the proceeds. In these cases, it is difficult for traders to recover any of their cryptocurrency. 

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In 2019, MapleChange, Satowallet, PureBit, PlusToken, and Quadriga, among others, were suspected of performing exit scams, resulting in the possible theft of millions of dollars' worth of cryptocurrency belonging to investors. 

ZDNet has reached out Altsbit with additional queries and will update if we hear back.

Cryptocurrency cyberattacks and breaches of 2019 (in pictures)

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