Vircurex Exchange Hack: Difference between revisions
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{{ | {{Case Study Under Construction}}{{Unattributed Sources}} | ||
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In the early days of exchanges, storage of funds in essentially hot wallets was incredibly common. With an anonymous exchange operator, once the hacks occurred, neither hack was revealed until far later. The exchange even lied about where they were based in an effort to prevent a lawsuit from occurring. | In the early days of exchanges, storage of funds in essentially hot wallets was incredibly common. With an anonymous exchange operator, once the hacks occurred, neither hack was revealed until far later. The exchange even lied about where they were based in an effort to prevent a lawsuit from occurring. | ||
This exchange or platform is based in Germany, or the incident targeted people primarily in Germany.<ref name="kylegibson-86" /><ref name="bitcointalklist-87 | This exchange or platform is based in Germany, or the incident targeted people primarily in Germany.<ref name="kylegibson-86" /><ref name="bitcointalklist-87" /><ref name="coindesk-179" /> | ||
== About Vircurex == | == About Vircurex == | ||
Vircurex was based in Germany. | |||
Homepage: vircurex.com<ref>[https://web.archive.org/web/20130424071356/https://vircurex.com/ Vircurex Exchange Homepage] (Dec 11, 2023)</ref> | |||
== The Reality == | == The Reality == | ||
The Vircurex platform had already suffered 2 significant hacks in 2013. | |||
== What Happened == | == What Happened == | ||
| Line 44: | Line 21: | ||
!Description | !Description | ||
|- | |- | ||
|January | |January 11th, 2013 | ||
| | |Date Of Incident | ||
| | |The widely referenced date of the incident<ref name="bitcoinexchangeguide-218" />. | ||
|- | |||
|March 24th, 2014 | |||
|CoinDesk Report | |||
|CoinDesk reports that the platform has frozen withdrawals<ref name="coindesk-179" />. TBD need to review article and update link. Got internal server error and issues accessing archive on Dec 11, 2023. | |||
|- | |- | ||
| | |January 12th, 2018 11:00:48 AM MST | ||
| | |CoinDesk Report Of Lawsuit | ||
| | |CoinDesk reports that former customers of the cryptocurrency exchange Vircurex are suing the platform four years after it froze their funds and allegedly failed to repay them. Filed in the U.S. District Court in Colorado, the lawsuit accuses Vircurex of breach of contract, conversion of funds, fraud, and unjust enrichment. The complaint details how only a few account holders received their funds after the exchange froze withdrawals due to claimed insufficient reserves, with approximately $50 million collectively frozen in accounts. Despite the loss, Vircurex has allowed customers to deposit funds over the past four years and continues to operate. The lawsuit alleges deceptive statements and false promises by Vircurex, accusing the exchange of attempting to evade accountability<ref name="coindesk-178" />. | ||
|- | |||
|May 7th, 2019 7:49:57 PM MDT | |||
|Inclusion In BitcoinExchangeGuide | |||
|The incident is included as a "Hack / Theft" in a published list by BitcoinExchangeGuide.com<ref name="bitcoinexchangeguide-218" />. | |||
|} | |} | ||
== Technical Details == | == Technical Details == | ||
This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited? | This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited? | ||
Yet more of its reserve funds were depleted by large withdrawals by some of its customers." | |||
== Total Amount Lost == | == Total Amount Lost == | ||
BitcoinExchangeGuide reports the loss as "1.666 Bitcoin" or "$50.000k" USD<ref name="bitcoinexchangeguide-218" />. | |||
The total amount lost has been estimated at $50,000,000 USD. | The total amount lost has been estimated at $50,000,000 USD. | ||
| Line 66: | Line 56: | ||
== Ultimate Outcome == | == Ultimate Outcome == | ||
What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done? | What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done? | ||
"In 2014, the exchange reported it was near insolvency after losing large amounts of its reserve funds. According to the lawsuit, part of this loss came from “two purported hacks the exchange experienced in mid-2013.” | |||
“The freeze will affect all bitcoin, litecoin, feathercoin and terracoin withdrawals. A message on Vircurex’s site says it will create a new balance type called ‘Frozen Funds’ covering all balances in the aforementioned currencies. The company maintains it won’t be shutting down, saying it intends to “gradually pay back the losses”.” | |||
“That Vircurex had a reserve shortfall had been known for some time, though not the exact amount. It froze BTC/LTC withdrawals in January 2013 after reporting that wallets had been compromised, but still allowed deposits in those currencies to continue.” | |||
“In a lawsuit filed in the U.S. District Court in Colorado, a former Vircurex customer accuses the exchange of breach of contract, conversion of funds, fraud and unjust enrichment. The suit explained how only a few of the account holders had received their funds after the exchange froze all withdrawals due to a claimed lack of reserves. At present, the frozen accounts contain a combined $50 million.” “Vircurex’s steps to prevent its customers from suing included stating it was incorporated in Belize, which it is not, as well as indicating it might be based in Beijing. The lawsuit states the exchange is actually based out of Germany, but has never been legally incorporated in any jurisdiction, meaning it is not recognized as a formal business by any government.” | |||
== Total Amount Recovered == | == Total Amount Recovered == | ||
| Line 92: | Line 92: | ||
== References == | == References == | ||
<references><ref name="kylegibson-86">[https://medium.com/@kylegibson/100-crypto-thefts-a-timeline-of-hacks-glitches-exit-scams-and-other-lost-cryptocurrency-873c87fd5522 100 Crypto Thefts: A Timeline of Hacks, Glitches, Exit Scams, and other Lost Cryptocurrency Incidents] (Jan 25, 2020)</ref> | <references> | ||
<ref name="kylegibson-86">[https://medium.com/@kylegibson/100-crypto-thefts-a-timeline-of-hacks-glitches-exit-scams-and-other-lost-cryptocurrency-873c87fd5522 100 Crypto Thefts: A Timeline of Hacks, Glitches, Exit Scams, and other Lost Cryptocurrency Incidents] (Jan 25, 2020)</ref> | |||
<ref name="bitcointalklist-87">[https://bitcointalk.org/index.php?topic=576337 List of Major Bitcoin Heists, Thefts, Hacks, Scams, and Losses] (Feb 15, 2020)</ref> | <ref name="bitcointalklist-87">[https://bitcointalk.org/index.php?topic=576337 List of Major Bitcoin Heists, Thefts, Hacks, Scams, and Losses] (Feb 15, 2020)</ref> | ||
<ref name="coindesk-178">[https://www.coindesk.com/former-customers-sue-vircurex-exchange-over-frozen-crypto-funds Former Customers Sue Crypto Exchange Vircurex Over Frozen Funds - CoinDesk] (Feb 29, 2020)</ref> | <ref name="coindesk-178">[https://www.coindesk.com/former-customers-sue-vircurex-exchange-over-frozen-crypto-funds Former Customers Sue Crypto Exchange Vircurex Over Frozen Funds - CoinDesk] (Feb 29, 2020)</ref> | ||
<ref name="coindesk-179">[https://www.coindesk.com/exchange-vircurex-freezes-withdrawals-claims-lack-reserves Exchange Vircurex Freezes Withdrawals, Claims Lack of Reserves - CoinDesk] (Feb 29, 2020)</ref> | |||
<ref name="coindesk-179">[https://www.coindesk.com/exchange-vircurex-freezes-withdrawals-claims-lack-reserves Exchange Vircurex Freezes Withdrawals, Claims Lack of Reserves] (Feb 29, 2020)</ref> | <ref name="bitcoinexchangeguide-218">[https://web.archive.org/web/20200413134528/https://bitcoinexchangeguide.com/bitcoin/scams-hacks/ Bitcoin Scams and Cryptocurrency Hacks List - BitcoinExchangeGuide.com Archive April 13th, 2020 7:45:28 AM MDT] (Mar 5, 2020)</ref> | ||
</references> | |||
<ref name="bitcoinexchangeguide-218">[https://bitcoinexchangeguide.com/bitcoin/scams-hacks/ Bitcoin Scams and Cryptocurrency Hacks List - BitcoinExchangeGuide.com] (Mar 5, 2020)</ref></references> | |||
Revision as of 14:29, 11 December 2023
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In the early days of exchanges, storage of funds in essentially hot wallets was incredibly common. With an anonymous exchange operator, once the hacks occurred, neither hack was revealed until far later. The exchange even lied about where they were based in an effort to prevent a lawsuit from occurring.
This exchange or platform is based in Germany, or the incident targeted people primarily in Germany.[1][2][3]
About Vircurex
Vircurex was based in Germany.
Homepage: vircurex.com[4]
The Reality
The Vircurex platform had already suffered 2 significant hacks in 2013.
What Happened
The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.
| Date | Event | Description |
|---|---|---|
| January 11th, 2013 | Date Of Incident | The widely referenced date of the incident[5]. |
| March 24th, 2014 | CoinDesk Report | CoinDesk reports that the platform has frozen withdrawals[3]. TBD need to review article and update link. Got internal server error and issues accessing archive on Dec 11, 2023. |
| January 12th, 2018 11:00:48 AM MST | CoinDesk Report Of Lawsuit | CoinDesk reports that former customers of the cryptocurrency exchange Vircurex are suing the platform four years after it froze their funds and allegedly failed to repay them. Filed in the U.S. District Court in Colorado, the lawsuit accuses Vircurex of breach of contract, conversion of funds, fraud, and unjust enrichment. The complaint details how only a few account holders received their funds after the exchange froze withdrawals due to claimed insufficient reserves, with approximately $50 million collectively frozen in accounts. Despite the loss, Vircurex has allowed customers to deposit funds over the past four years and continues to operate. The lawsuit alleges deceptive statements and false promises by Vircurex, accusing the exchange of attempting to evade accountability[6]. |
| May 7th, 2019 7:49:57 PM MDT | Inclusion In BitcoinExchangeGuide | The incident is included as a "Hack / Theft" in a published list by BitcoinExchangeGuide.com[5]. |
Technical Details
This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?
Yet more of its reserve funds were depleted by large withdrawals by some of its customers."
Total Amount Lost
BitcoinExchangeGuide reports the loss as "1.666 Bitcoin" or "$50.000k" USD[5].
The total amount lost has been estimated at $50,000,000 USD.
How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?
Immediate Reactions
How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?
Ultimate Outcome
What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?
"In 2014, the exchange reported it was near insolvency after losing large amounts of its reserve funds. According to the lawsuit, part of this loss came from “two purported hacks the exchange experienced in mid-2013.”
“The freeze will affect all bitcoin, litecoin, feathercoin and terracoin withdrawals. A message on Vircurex’s site says it will create a new balance type called ‘Frozen Funds’ covering all balances in the aforementioned currencies. The company maintains it won’t be shutting down, saying it intends to “gradually pay back the losses”.”
“That Vircurex had a reserve shortfall had been known for some time, though not the exact amount. It froze BTC/LTC withdrawals in January 2013 after reporting that wallets had been compromised, but still allowed deposits in those currencies to continue.”
“In a lawsuit filed in the U.S. District Court in Colorado, a former Vircurex customer accuses the exchange of breach of contract, conversion of funds, fraud and unjust enrichment. The suit explained how only a few of the account holders had received their funds after the exchange froze all withdrawals due to a claimed lack of reserves. At present, the frozen accounts contain a combined $50 million.” “Vircurex’s steps to prevent its customers from suing included stating it was incorporated in Belize, which it is not, as well as indicating it might be based in Beijing. The lawsuit states the exchange is actually based out of Germany, but has never been legally incorporated in any jurisdiction, meaning it is not recognized as a formal business by any government.”
Total Amount Recovered
There do not appear to have been any funds recovered in this case.
What funds were recovered? What funds were reimbursed for those affected users?
Ongoing Developments
What parts of this case are still remaining to be concluded?
General Prevention Policies
Coming soon.
Individual Prevention Policies
No specific policies for individual prevention have yet been identified in this case.
For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.
Platform Prevention Policies
Policies for platforms to take to prevent this situation have not yet been selected in this case.
For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.
Regulatory Prevention Policies
No specific regulatory policies have yet been identified in this case.
For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.
References
- ↑ 100 Crypto Thefts: A Timeline of Hacks, Glitches, Exit Scams, and other Lost Cryptocurrency Incidents (Jan 25, 2020)
- ↑ List of Major Bitcoin Heists, Thefts, Hacks, Scams, and Losses (Feb 15, 2020)
- ↑ 3.0 3.1 Exchange Vircurex Freezes Withdrawals, Claims Lack of Reserves - CoinDesk (Feb 29, 2020)
- ↑ Vircurex Exchange Homepage (Dec 11, 2023)
- ↑ 5.0 5.1 5.2 Bitcoin Scams and Cryptocurrency Hacks List - BitcoinExchangeGuide.com Archive April 13th, 2020 7:45:28 AM MDT (Mar 5, 2020)
- ↑ Former Customers Sue Crypto Exchange Vircurex Over Frozen Funds - CoinDesk (Feb 29, 2020)