$10 100 000 USD

JUNE 2019




"The GateHub platform was created in 2014 by a UK company. When it was first launched, it was built specifically for the Ripple (XRP) cryptocurrency, however, it now supports other coins too. GateHub has two main functions as it not only allows people to store their coins, but it allows people to trade them too!" "The GateHub wallet was originally built to support Ripple (XRP), but now it supports a total of 8 different coins."


"GateHub Ltd is a UK based multinational technology company that specializes in development of financial services and products, which include blockchain based global settlement system, interledger based payment scheme, digital wallet, connector and gateway service." "GateHub is UK-based crypto exchange, owned by London-based GateHub Limited. However, it seems that its founders originate from Slovenia." "Level 3 207 Regent Street W1B 3HH London United Kingdom" "Zaloška 1 1000 Ljubljana Slovenia"


"The wallet allows you to send and receive cryptocurrencies, as well as store them. It is also possible to send coins to another GateHub user by entering their username, which makes it super straight forward in comparison to a lot of other wallets. The wallet is accessed online through a web browser, which is available either through a desktop device, Android or iOS."


"The GateHub platform is the “official” online wallet solution for XRP owners that lets users send funds to other people by using their name, wallet name, Ripple address, or email address. The project has been around for some time now and is clearly designed to cater to as many people as possible. Another interesting thing to mention is that it is also possible to access the trade feature within the wallet itself."


“On June 1, Ripple (XRP) wallet provider GateHub suffered a security hack in which 23.2 million XRP were stolen from over 103 user wallets, although over 18,000 total accounts may have been affected.”


"Back on June 6, cryptocurrency wallet service Gatehub revealed a $10.1 million hack that compromised nearly 100 customers’ wallets. The breach was discovered only after several users notified the exchange that funds from their wallets were missing."


"Recently, we have been notified by our customers and community members about funds on their XRP Ledger wallets being stolen and immediately started monitoring network activity and conducted an extensive internal investigation."


"Although we have not identified any action or omission by GateHub that may have facilitated or allowed this apparent theft to occur, we apologize deeply to all of our customers for this issue and pledge to get to the bottom of it." "The nature of the attack is still unknown to GateHub’s staff although they have confirmed that they do not suspect the actions of their staff to have either facilitated or allowed the hack."


"At the moment we estimate that approximately 100 XRP Ledger wallets were compromised. So far it looks like all the victims had their XRP Ledger wallets hosted on GateHub, but we cannot yet rule out that some wallets were not."


"The acknowledgement by GateHub that there appears to have been a serious security breach coincided with the publication of a technical report by GateHub community member Thomas Silkjær."


"That report claims 23.2 million Ripple coins (estimated to be worth nearly US $9.7 million) had been stolen from 80-90 GateHub accounts, with just over half of the booty already laundered through exchanges and mixer services."


"What isn’t known at the time of writing is just how hackers managed to compromise the accounts, with GateHub saying that it has detected no suspicious logins or signs of any attempted brute-forcing of accounts."


"GateHub says that while it continues to investigate the security breach it is not sharing any official conclusions about what occurred."


"GateHub does, however, note that it has detected “an increased amount of API calls (with valid access tokens) coming from a small number of IP addresses”, and suggests that this might be how criminals were able to gain access to encrypted secret keys. GateHub notes that API requests to victims’ accounts were all authorised with a valid access token."


“According a statement by GateHub, hackers penetrated the wallets after gaining access to a database that contained valid customer access tokens. These credentials essentially tell a server who the users are and keep them logged in. When a user logs out, the access token is destroyed, and the user must log back in to receive a new one. Broken authentication such as compromised access tokens is number two on the OWASP’s top 10 attack vectors.”


"GateHub says that it has notified law enforcement about the theft." “We will continue to work closely with law enforcement agencies from different jurisdictions to identify the criminal hackers responsible for this theft. We are in contact with more than a dozen exchanges and wallet providers to freeze the stolen funds before they are cashed out. Once these legal procedures are completed we will know the exact amount of funds that our customers will be able to retrieve. Until then we kindly ask our customers to remain patient and report any suspected losses to their local law enforcement agencies in case they haven’t done so already.”


"Services used to cash out (not complicit). We have identified some of the largest recipients (rounded figures): changelly.com: 6,000,000 XRP, changenow.io: 3,250,000 XRP, kucoin.com: 1,500,000 XRP, huobi.com: 930,000 XRP, exmo.me: 135,000 XRP, hitbtc.com: 115,000 XRP, binance.com: 110,000 XRP, alfacashier.com: 50,000 XRP."


"However, in 2017 there was a security issue that resulted in people having their coins stolen. The GateHub centralized servers were hacked, which allowed the criminals to get away with more than $5 million in cryptocurrency."


"According to various users, GateHub said they would not refund the stolen funds."

It appears that GateHub is both a wallet and exchange service provider, and that customers using the wallet do not actually own their own keys. GateHub stored customer wallets in a database which was accessible online. The company advertises on their website that they “make sure your money is always safe” and “you won’t ever want to use your old bank account again.” It would appear that the company is not in any position to cover the losses, and only 500k of XRP were recovered from other exchanges.


While the most secure storage by far is a multi-signature wallet with all keys properly held by trained individuals, security of hot wallets can be improved by having additional experts review the security of systems. Our proposed framework sees 2 reviews prior to launch, and regular reviews on an ongoing basis. In the event of a breach, a comprehensive industry insurance fund would be available, which handles fraud and covers additional events beyond self-insurance.


Check Our Framework For Safe Secure Exchange Platforms

Sources And Further Reading

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