Gatecoin Hack: Difference between revisions
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Gatecoin was one of the first regulated digital asset exchanges. This didn’t stop the hack of 185,000 ETH and 250 BTC. According to a forensic analysis, the exchange may have been the victim of a man-in-the-middle attack. The malicious external party involved in this breach managed to alter their system so that BTC and ETH deposit transfers bypassed the multisig cold storage and went directly to the hacker’s hot wallet during the breach period. The company fired their CTO, managed to raise $500k in order to reopen, and ultimately repaid all customers. They were saved by maintaining large cold wallet reserves which appear to have been properly stored, and appear to have dealt with the issue transparently. Having hot wallet insurance would have further assisted with the recovery; however a system like Proof of Reserves or an automated alert system could have allowed the issue to be noted sooner. | Gatecoin was one of the first regulated digital asset exchanges. This didn’t stop the hack of 185,000 ETH and 250 BTC. According to a forensic analysis, the exchange may have been the victim of a man-in-the-middle attack. The malicious external party involved in this breach managed to alter their system so that BTC and ETH deposit transfers bypassed the multisig cold storage and went directly to the hacker’s hot wallet during the breach period. The company fired their CTO, managed to raise $500k in order to reopen, and ultimately repaid all customers. They were saved by maintaining large cold wallet reserves which appear to have been properly stored, and appear to have dealt with the issue transparently. Having hot wallet insurance would have further assisted with the recovery; however a system like Proof of Reserves or an automated alert system could have allowed the issue to be noted sooner. | ||
This exchange or platform is based in Hong Kong, or the incident targeted people primarily in Hong Kong.<ref name=" | This exchange or platform is based in Hong Kong, or the incident targeted people primarily in Hong Kong.<ref name="kylegibson-86" /><ref>https://www.coindesk.com/gatecoin-2-million-bitcoin-ether-security-breach</ref><ref>https://www.reddit.com/r/gatecoin/comments/4jb1la/official_statement_regarding_gatecoin_hot_wallet/</ref><ref>https://cointelegraph.com/news/banks-shun-bitcoin-in-hong-kong-businesses-seek-foreign-help</ref><ref>https://www.scmp.com/news/hong-kong/economy/article/2120506/hong-kongs-bitcoin-businesses-suffer-after-local-bank</ref><ref>https://cointelegraph.com/news/gatecoin-launches-bitcoin-exchange-with-segregated-bank-accounts</ref><ref>https://gatecoin.com/</ref><ref>https://www.bloomberg.com/news/articles/2019-03-03/why-crypto-companies-still-can-t-open-checking-accounts</ref><ref>https://www.reddit.com/r/gatecoin/comments/b0pe1i/gatecoin_liquidated/</ref> | ||
== About Gatecoin == | == About Gatecoin == | ||
Established in 2013 in Hong Kong, Gatecoin primarily focused on Bitcoin and Ethereum markets<ref name="thenextweb-16" />. | |||
This exchange or platform is based in Hong Kong, or the incident targeted people primarily in Hong Kong. | This exchange or platform is based in Hong Kong, or the incident targeted people primarily in Hong Kong. | ||
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!Description | !Description | ||
|- | |- | ||
|May | |May 13th, 2016 | ||
| | |Cited Date | ||
| | |The date of the hack cited by Kyle Gibson<ref name="kylegibson-86" />. | ||
|- | |- | ||
| | |March 14th, 2019 8:50:00 AM MDT | ||
| | |CoinTelegraph Article On Bankruptcy | ||
| | |CoinTelegraph reports that following ongoing banking problems and a tumultuous history marked by a major hack in May 2016, Hong Kong-based cryptocurrency exchange Gatecoin has been ordered to undergo compulsory liquidation<ref name="cointelegraph-17" />. The exchange, which lost around $2 million in cryptocurrencies during the hack, announced its winding-up order on March 13, leading to an immediate cessation of operations. Gatecoin attributed its financial difficulties to issues with a Payment Service Provider (PSP), which it claimed failed to process transfers promptly, causing substantial losses and ultimately rendering the exchange unable to sustain its operations<ref name="cointelegraph-17" />. Despite efforts to recover funds and mitigate losses, Gatecoin's struggles persisted, leading to its final liquidation<ref name="cointelegraph-17" />. | ||
|- | |||
|March 14th, 2019 7:00:17 PM MDT | |||
|CoinDesk Article On Bankruptcy | |||
|CoinDesk reports that Hong Kong-based cryptocurrency exchange Gatecoin is set to cease operations and enter liquidation following a prolonged struggle to recover funds lost amid a dispute with a former payment services provider<ref name="coindesk-18" />. The announcement, made via the company's website, cited ongoing banking issues since September 2018 as a primary reason for the shutdown<ref name="coindesk-18" />. Despite efforts to resume operations with alternative processors and banks, Gatecoin faced insurmountable challenges, leading to a court order to wind up immediately<ref name="coindesk-18" />. The exchange assured customers of its intent to distribute remaining assets to creditors but left uncertainties regarding reimbursement for those affected by the 2016 cyberattack that resulted in the loss of significant cryptocurrency holdings<ref name="coindesk-18" />. | |||
|- | |||
|April 1st, 2019 2:45:11 AM MDT | |||
|TheNextWeb Article | |||
|TheNextWeb reports on Gatecoin has finally met its demise as liquidators take control of the company after facing a series of hacking incidents and banking troubles<ref name="thenextweb-16" />. Established in 2013 in Hong Kong, Gatecoin primarily focused on Bitcoin and Ethereum markets. However, in 2016, it suffered a significant loss of 185,000 ETH and 250 BTC due to a hack on its hot wallets, followed by banking disruptions in 2017 when its Hong Kong-based accounts were frozen<ref name="thenextweb-16" />. With the appointment of official liquidators, Gatecoin's journey comes to a definitive end, marking the closure of one of the pioneering exchanges in the cryptocurrency landscape<ref name="thenextweb-16" />. | |||
|} | |} | ||
== Total Amount Lost == | == Total Amount Lost == | ||
Kyle Gibson reports the amount at 250 bitcoin, with an estimated value of $2,500,000 USD<ref name="kylegibson-86" />. The theft of any Ethereum amount is not mentioned<ref name="kylegibson-86" />. | |||
According to TheNextWeb it suffered a significant loss of 185,000 ETH and 250 BTC due to a hack on its hot wallets<ref name="thenextweb-16" />. | |||
According to CoinTelegraph, the amount lost "during the hack" was "around $2 million in cryptocurrencies"<ref name="cointelegraph-17" />. | |||
The total amount lost has been estimated at $2,500,000 USD. | The total amount lost has been estimated at $2,500,000 USD. | ||
| Line 60: | Line 74: | ||
== Immediate Reactions == | == 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? | 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? | ||
"News emerged last week of yet another security event in the digital currency exchange ecosystem, this time impacting a Hong Kong-based service involved in the sale of assets related to Ethereum-based decentralized autonomous organizations (DAOs). As reported on Friday, Gatecoin experienced a cyberattack on its hot wallets that resulted in the loss of funds. A new update from the exchange team indicated that as much as $2m was lost, confirming rumors that circulated soon after the hack became apparent."<ref name="kylegibson-86" /> | |||
== Ultimate Outcome == | == Ultimate Outcome == | ||
Gatecoin experienced significant banking disruptions in 2017, and ultimately entered bankruptcy in 2019. The exchange is remembered in various historical records. | |||
=== Banking Disruptions in 2017 === | |||
Gatecoin experienced banking disruptions in 2017 when its Hong Kong-based accounts were frozen<ref name="thenextweb-16" />. | |||
=== Exchange Enters Bankruptcy === | |||
Hong Kong-based cryptocurrency exchange Gatecoin was reportedly ordered to undergo compulsory liquidation on March 13th, 2019, although the court issuing the order was not specified<ref name="coindesk-18" /><ref name="cointelegraph-17" />. The exchange, which , announced its winding-up order on March 13, leading to an immediate cessation of operations. Gatecoin attributed its financial difficulties to issues with a Payment Service Provider (PSP), which it claimed failed to process transfers promptly, causing substantial losses and ultimately rendering the exchange unable to sustain its operations<ref name="cointelegraph-17" />. TheNextWeb reported on April 1st that Gatecoin had finally met its demise as liquidators take control of the company after facing a series of hacking incidents and banking troubles<ref name="thenextweb-16" />. Despite efforts to recover funds and mitigate losses, Gatecoin's struggles persisted, leading to its final liquidation<ref name="cointelegraph-17" />. With the appointment of official liquidators, Gatecoin's journey comes to a definitive end, marking the closure of one of the pioneering exchanges in the cryptocurrency landscape<ref name="thenextweb-16" />. | |||
CoinDesk reports that Hong Kong-based cryptocurrency exchange Gatecoin is set to cease operations and enter liquidation following a prolonged struggle to recover funds lost amid a dispute with a former payment services provider. The announcement, made via the company's website, cited ongoing banking issues since September 2018 as a primary reason for the shutdown<ref name="coindesk-18" />. Despite efforts to resume operations with alternative processors and banks, Gatecoin faced insurmountable challenges, leading to a court order to wind up immediately<ref name="coindesk-18" />. The exchange assured customers of its intent to distribute remaining assets to creditors but left uncertainties regarding reimbursement for those affected by the 2016 cyberattack that resulted in the loss of significant cryptocurrency holdings<ref name="coindesk-18" />. | |||
=== Inclusion On Hack Lists === | |||
<ref name="kylegibson-86" /><ref name="bitcoinexchangeguide-218" /><ref name="slowmisthacked-1160" /> | |||
== Total Amount Recovered == | == Total Amount Recovered == | ||
| Line 89: | Line 117: | ||
== References == | == References == | ||
<references><ref name="thenextweb-16">[https://thenextweb.com/hardfork/2019/04/01/gatecoin-cryptocurrency-exchange-liquidators/ Liquidators put the final nail in Gatecoin’s coffin] (Feb 3, 2020)</ref> | <references> | ||
<ref name="thenextweb-16">[https://thenextweb.com/hardfork/2019/04/01/gatecoin-cryptocurrency-exchange-liquidators/ Liquidators put the final nail in Gatecoin’s coffin - TheNextWeb] (Feb 3, 2020)</ref> | |||
<ref name="cointelegraph-17">[https://cointelegraph.com/news/previously-hacked-gatecoin-exchange-receives-liquidation-order-following-banking-problems Previously Hacked Gatecoin Exchange Receives Liquidation Order Following Banking Problems] (Feb 3, 2020)</ref> | <ref name="cointelegraph-17">[https://cointelegraph.com/news/previously-hacked-gatecoin-exchange-receives-liquidation-order-following-banking-problems Previously Hacked Gatecoin Exchange Receives Liquidation Order Following Banking Problems - CoinTelegraph] (Feb 3, 2020)</ref> | ||
<ref name="coindesk-18">[https://www.coindesk.com/gatecoin-crypto-exchange-to-shut-down-on-courts-orders Gatecoin Crypto Exchange to Shut Down on Court’s Orders - CoinDesk] (Feb 3, 2020)</ref> | <ref name="coindesk-18">[https://www.coindesk.com/gatecoin-crypto-exchange-to-shut-down-on-courts-orders Gatecoin Crypto Exchange to Shut Down on Court’s Orders - CoinDesk] (Feb 3, 2020)</ref> | ||
<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 - Kyle Gibson] (Jan 25, 2020)</ref> | |||
<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="bitcoinexchangeguide-218">[https://bitcoinexchangeguide.com/bitcoin/scams-hacks/ Bitcoin Scams and Cryptocurrency Hacks List - BitcoinExchangeGuide.com] (Mar 5, 2020)</ref> | <ref name="bitcoinexchangeguide-218">[https://bitcoinexchangeguide.com/bitcoin/scams-hacks/ Bitcoin Scams and Cryptocurrency Hacks List - BitcoinExchangeGuide.com] (Mar 5, 2020)</ref> | ||
<ref name="slowmisthacked-1160">[https://hacked.slowmist.io/en/?c=Exchange SlowMist Hacked - SlowMist Zone] (Jun 26, 2021)</ref> | |||
<ref name="slowmisthacked-1160">[https://hacked.slowmist.io/en/?c=Exchange SlowMist Hacked - SlowMist Zone] (Jun 26, 2021)</ref></references> | </references> | ||
Revision as of 15:35, 1 April 2024
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Gatecoin was one of the first regulated digital asset exchanges. This didn’t stop the hack of 185,000 ETH and 250 BTC. According to a forensic analysis, the exchange may have been the victim of a man-in-the-middle attack. The malicious external party involved in this breach managed to alter their system so that BTC and ETH deposit transfers bypassed the multisig cold storage and went directly to the hacker’s hot wallet during the breach period. The company fired their CTO, managed to raise $500k in order to reopen, and ultimately repaid all customers. They were saved by maintaining large cold wallet reserves which appear to have been properly stored, and appear to have dealt with the issue transparently. Having hot wallet insurance would have further assisted with the recovery; however a system like Proof of Reserves or an automated alert system could have allowed the issue to be noted sooner.
This exchange or platform is based in Hong Kong, or the incident targeted people primarily in Hong Kong.[1][2][3][4][5][6][7][8][9]
About Gatecoin
Established in 2013 in Hong Kong, Gatecoin primarily focused on Bitcoin and Ethereum markets[10].
This exchange or platform is based in Hong Kong, or the incident targeted people primarily in Hong Kong.
The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.
Include:
- Known history of when and how the service was started.
- What problems does the company or service claim to solve?
- What marketing materials were used by the firm or business?
- Audits performed, and excerpts that may have been included.
- Business registration documents shown (fake or legitimate).
- How were people recruited to participate?
- Public warnings and announcements prior to the event.
Don't Include:
- Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
- Anything that wasn't reasonably knowable at the time of the event.
There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.
The Reality
This sections is included if a case involved deception or information that was unknown at the time. Examples include:
- When the service was actually started (if different than the "official story").
- Who actually ran a service and their own personal history.
- How the service was structured behind the scenes. (For example, there was no "trading bot".)
- Details of what audits reported and how vulnerabilities were missed during auditing.
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 |
|---|---|---|
| May 13th, 2016 | Cited Date | The date of the hack cited by Kyle Gibson[1]. |
| March 14th, 2019 8:50:00 AM MDT | CoinTelegraph Article On Bankruptcy | CoinTelegraph reports that following ongoing banking problems and a tumultuous history marked by a major hack in May 2016, Hong Kong-based cryptocurrency exchange Gatecoin has been ordered to undergo compulsory liquidation[11]. The exchange, which lost around $2 million in cryptocurrencies during the hack, announced its winding-up order on March 13, leading to an immediate cessation of operations. Gatecoin attributed its financial difficulties to issues with a Payment Service Provider (PSP), which it claimed failed to process transfers promptly, causing substantial losses and ultimately rendering the exchange unable to sustain its operations[11]. Despite efforts to recover funds and mitigate losses, Gatecoin's struggles persisted, leading to its final liquidation[11]. |
| March 14th, 2019 7:00:17 PM MDT | CoinDesk Article On Bankruptcy | CoinDesk reports that Hong Kong-based cryptocurrency exchange Gatecoin is set to cease operations and enter liquidation following a prolonged struggle to recover funds lost amid a dispute with a former payment services provider[12]. The announcement, made via the company's website, cited ongoing banking issues since September 2018 as a primary reason for the shutdown[12]. Despite efforts to resume operations with alternative processors and banks, Gatecoin faced insurmountable challenges, leading to a court order to wind up immediately[12]. The exchange assured customers of its intent to distribute remaining assets to creditors but left uncertainties regarding reimbursement for those affected by the 2016 cyberattack that resulted in the loss of significant cryptocurrency holdings[12]. |
| April 1st, 2019 2:45:11 AM MDT | TheNextWeb Article | TheNextWeb reports on Gatecoin has finally met its demise as liquidators take control of the company after facing a series of hacking incidents and banking troubles[10]. Established in 2013 in Hong Kong, Gatecoin primarily focused on Bitcoin and Ethereum markets. However, in 2016, it suffered a significant loss of 185,000 ETH and 250 BTC due to a hack on its hot wallets, followed by banking disruptions in 2017 when its Hong Kong-based accounts were frozen[10]. With the appointment of official liquidators, Gatecoin's journey comes to a definitive end, marking the closure of one of the pioneering exchanges in the cryptocurrency landscape[10]. |
Total Amount Lost
Kyle Gibson reports the amount at 250 bitcoin, with an estimated value of $2,500,000 USD[1]. The theft of any Ethereum amount is not mentioned[1].
According to TheNextWeb it suffered a significant loss of 185,000 ETH and 250 BTC due to a hack on its hot wallets[10].
According to CoinTelegraph, the amount lost "during the hack" was "around $2 million in cryptocurrencies"[11].
The total amount lost has been estimated at $2,500,000 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?
"News emerged last week of yet another security event in the digital currency exchange ecosystem, this time impacting a Hong Kong-based service involved in the sale of assets related to Ethereum-based decentralized autonomous organizations (DAOs). As reported on Friday, Gatecoin experienced a cyberattack on its hot wallets that resulted in the loss of funds. A new update from the exchange team indicated that as much as $2m was lost, confirming rumors that circulated soon after the hack became apparent."[1]
Ultimate Outcome
Gatecoin experienced significant banking disruptions in 2017, and ultimately entered bankruptcy in 2019. The exchange is remembered in various historical records.
Banking Disruptions in 2017
Gatecoin experienced banking disruptions in 2017 when its Hong Kong-based accounts were frozen[10].
Exchange Enters Bankruptcy
Hong Kong-based cryptocurrency exchange Gatecoin was reportedly ordered to undergo compulsory liquidation on March 13th, 2019, although the court issuing the order was not specified[12][11]. The exchange, which , announced its winding-up order on March 13, leading to an immediate cessation of operations. Gatecoin attributed its financial difficulties to issues with a Payment Service Provider (PSP), which it claimed failed to process transfers promptly, causing substantial losses and ultimately rendering the exchange unable to sustain its operations[11]. TheNextWeb reported on April 1st that Gatecoin had finally met its demise as liquidators take control of the company after facing a series of hacking incidents and banking troubles[10]. Despite efforts to recover funds and mitigate losses, Gatecoin's struggles persisted, leading to its final liquidation[11]. With the appointment of official liquidators, Gatecoin's journey comes to a definitive end, marking the closure of one of the pioneering exchanges in the cryptocurrency landscape[10].
CoinDesk reports that Hong Kong-based cryptocurrency exchange Gatecoin is set to cease operations and enter liquidation following a prolonged struggle to recover funds lost amid a dispute with a former payment services provider. The announcement, made via the company's website, cited ongoing banking issues since September 2018 as a primary reason for the shutdown[12]. Despite efforts to resume operations with alternative processors and banks, Gatecoin faced insurmountable challenges, leading to a court order to wind up immediately[12]. The exchange assured customers of its intent to distribute remaining assets to creditors but left uncertainties regarding reimbursement for those affected by the 2016 cyberattack that resulted in the loss of significant cryptocurrency holdings[12].
Inclusion On Hack Lists
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
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 100 Crypto Thefts: A Timeline of Hacks, Glitches, Exit Scams, and other Lost Cryptocurrency Incidents - Kyle Gibson (Jan 25, 2020)
- ↑ https://www.coindesk.com/gatecoin-2-million-bitcoin-ether-security-breach
- ↑ https://www.reddit.com/r/gatecoin/comments/4jb1la/official_statement_regarding_gatecoin_hot_wallet/
- ↑ https://cointelegraph.com/news/banks-shun-bitcoin-in-hong-kong-businesses-seek-foreign-help
- ↑ https://www.scmp.com/news/hong-kong/economy/article/2120506/hong-kongs-bitcoin-businesses-suffer-after-local-bank
- ↑ https://cointelegraph.com/news/gatecoin-launches-bitcoin-exchange-with-segregated-bank-accounts
- ↑ https://gatecoin.com/
- ↑ https://www.bloomberg.com/news/articles/2019-03-03/why-crypto-companies-still-can-t-open-checking-accounts
- ↑ https://www.reddit.com/r/gatecoin/comments/b0pe1i/gatecoin_liquidated/
- ↑ 10.0 10.1 10.2 10.3 10.4 10.5 10.6 10.7 Liquidators put the final nail in Gatecoin’s coffin - TheNextWeb (Feb 3, 2020)
- ↑ 11.0 11.1 11.2 11.3 11.4 11.5 11.6 Previously Hacked Gatecoin Exchange Receives Liquidation Order Following Banking Problems - CoinTelegraph (Feb 3, 2020)
- ↑ 12.0 12.1 12.2 12.3 12.4 12.5 12.6 12.7 Gatecoin Crypto Exchange to Shut Down on Court’s Orders - CoinDesk (Feb 3, 2020)
- ↑ Bitcoin Scams and Cryptocurrency Hacks List - BitcoinExchangeGuide.com (Mar 5, 2020)
- ↑ SlowMist Hacked - SlowMist Zone (Jun 26, 2021)