Poloniex Withdrawal Hack: Difference between revisions
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== About Poloniex == | == About Poloniex == | ||
Poloniex welcomed users to its fast and secure exchange platform, offering the ability to trade bitcoins for various cryptocurrencies<ref name=":0">[https://web.archive.org/web/20140308062434/https://www.poloniex.com/ Poloniex Homepage Archive March 7th, 2014 11:24:34 PM MST] (Accessed Mar 4, 2024)</ref>. The platform lists a wide range of currencies, including Litecoin, Dogecoin, Namecoin, and many others<ref name=":0">[https://web.archive.org/web/20140308062434/https://www.poloniex.com/ Poloniex Homepage Archive March 7th, 2014 11:24:34 PM MST] (Accessed Mar 4, 2024)</ref>. Users can sign up for an account if they don't have one already, or utilize the navigation tabs provided to begin trading<ref name=":0">[https://web.archive.org/web/20140308062434/https://www.poloniex.com/ Poloniex Homepage Archive March 7th, 2014 11:24:34 PM MST] (Accessed Mar 4, 2024)</ref>. With its diverse selection of cryptocurrencies and intuitive platform layout, Poloniex aimed to cater to the needs of cryptocurrency traders of all levels<ref name=":0">[https://web.archive.org/web/20140308062434/https://www.poloniex.com/ Poloniex Homepage Archive March 7th, 2014 11:24:34 PM MST] (Accessed Mar 4, 2024)</ref>. | |||
Poloniex was a US-based cryptocurrency exchange<ref name=":1">[https://web.archive.org/web/20141011215150/https://www.poloniex.com/ Poloniex Homepage Archive October 11th, 2014 3:51:50 PM MDT] (Accessed Mar 4, 2024)</ref>. With just a valid email address, traders could start trading within minutes by creating an account or signing in if already a member<ref name=":1">[https://web.archive.org/web/20141011215150/https://www.poloniex.com/ Poloniex Homepage Archive October 11th, 2014 3:51:50 PM MDT] (Accessed Mar 4, 2024)</ref>. The platform promised best-in-class tools such as stop-limit orders to minimize trading risk, customizable SMA and two EMA lines, and candlesticks ranging from 5 minutes to 4 hours, along with fully zoomable charts covering complete market history<ref name=":1">[https://web.archive.org/web/20141011215150/https://www.poloniex.com/ Poloniex Homepage Archive October 11th, 2014 3:51:50 PM MDT] (Accessed Mar 4, 2024)</ref>. | |||
The platform emphasized community and support, resolving all support tickets promptly and with care<ref name=":1" />. It boasts an active chatbox community for idea-sharing and updates, with chatbox moderators on hand to address users' immediate questions and concerns<ref name=":1" />. | |||
Homepage:<ref name=":0">[https://web.archive.org/web/20140308062434/https://www.poloniex.com/ Poloniex Homepage Archive March 7th, 2014 11:24:34 PM MST] (Accessed Mar 4, 2024)</ref><ref name=":1" /> | |||
== The Reality == | == The Reality == | ||
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== Total Amount Lost == | == Total Amount Lost == | ||
The total amount lost has been estimated at $662,000 USD. | The total amount lost has been estimated at $662,000 USD. | ||
== Immediate Reactions == | == Immediate Reactions == | ||
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The incident was ultimately included in lists compiled by Bitcoin Magazine<ref name="bitcoinmagazine-6" />, Kyle Gibson<ref name="kylegibson-86" />, the Bitcoin Exchange Guide<ref name="bitcoinexchangeguide-218" />, and Slowmist<ref name="slowmisthacked-1160" />. | The incident was ultimately included in lists compiled by Bitcoin Magazine<ref name="bitcoinmagazine-6" />, Kyle Gibson<ref name="kylegibson-86" />, the Bitcoin Exchange Guide<ref name="bitcoinexchangeguide-218" />, and Slowmist<ref name="slowmisthacked-1160" />. | ||
=== Updated Homepage === | |||
The Poloniex homepage following the incident appeared to take a more security-focused approach. In terms of security, Poloniex promised to ensure the safety of customer funds by keeping the majority of them in cold storage<ref name=":1" />. The entire exchange reported undergoing continual audits and inspections to detect any unusual activity, with two-factor authentication available for added protection<ref name=":1" />. | |||
== Total Amount Recovered == | == Total Amount Recovered == | ||
Revision as of 16:46, 4 March 2024
Notice: This page is a new case study and some aspects have not been fully researched. Some sections may be incomplete or reflect inaccuracies present in initial sources. Please check the References at the bottom for further information and perform your own additional assessment. Please feel free to contribute by adding any missing information or sources you come across. If you are new here, please read General Tutorial on Wikis or Anatomy of a Case Study for help getting started.
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Hot wallets are almost always hackable, whether for a silly error like this one or for more complicated exploits. Poloniex is interesting in that it presently claims insurance on the front of the website, and expressly denies having insurance in the terms of service. They’re also apparently based in the United States and working with regulators, yet unable to serve any residents of the United States. Hopefully they have real hot wallet insurance which can be used in the event of any future hacks.
This exchange or platform is based in United States, or the incident targeted people primarily in United States.[1][2][3][4][5][6][7]
https://bitcointalk.org/index.php?topic=499580.240
https://www.blockchain.com/explorer/addresses/btc/1Ktq7TE3J5vZ3c99M5weqKfFcNkHQdqPrq
https://www.blockchain.com/explorer/addresses/btc/1Ktq7TE3J5vZ3c99M5weqKfFcNkHQdqPrq
https://bitcointalk.org/index.php?topic=499580.msg5507709#msg5507709
https://bitcointalk.org/index.php?topic=500157.20
About Poloniex
Poloniex welcomed users to its fast and secure exchange platform, offering the ability to trade bitcoins for various cryptocurrencies[8]. The platform lists a wide range of currencies, including Litecoin, Dogecoin, Namecoin, and many others[8]. Users can sign up for an account if they don't have one already, or utilize the navigation tabs provided to begin trading[8]. With its diverse selection of cryptocurrencies and intuitive platform layout, Poloniex aimed to cater to the needs of cryptocurrency traders of all levels[8].
Poloniex was a US-based cryptocurrency exchange[9]. With just a valid email address, traders could start trading within minutes by creating an account or signing in if already a member[9]. The platform promised best-in-class tools such as stop-limit orders to minimize trading risk, customizable SMA and two EMA lines, and candlesticks ranging from 5 minutes to 4 hours, along with fully zoomable charts covering complete market history[9].
The platform emphasized community and support, resolving all support tickets promptly and with care[9]. It boasts an active chatbox community for idea-sharing and updates, with chatbox moderators on hand to address users' immediate questions and concerns[9].
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 |
|---|---|---|
| March 1st, 2014 12:00:28 AM MST | Main Event | Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here. |
| March 4th, 2014 1:31:32 AM MST | BitcoinTalk Thread | A new thread is posted in the BitcoinTalk forum which covers the event. It's posted by busoni, who is the proclaimed Owner of Poloniex. |
Technical Details
"The hacker discovered that if you place several withdrawals all in practically the same instant, they will get processed at more or less the same time. This will result in a negative balance, but valid insertions into the database, which then get picked up by the withdrawal daemon." “The major problem here was that withdrawals should have been queued at every step of the way. This could not have happened if withdrawal requests were processed sequentially instead of simultaneously. Additionally, auditing and security features were not explicitly looking for negative balances. They add deposits and withdrawals and check that accounts are in balance. If you have 2 BTC, withdraw 10 BTC, and are left with -8 BTC, the software would see that you deposited 2, withdrew 10, and have exactly what you should: -8.”
Total Amount Lost
The total amount lost has been estimated at $662,000 USD.
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?
“I sincerely apologize for this,” Poloniex’s owner wrote in a statement, “and I am very grateful to the many people who have already expressed their support and belief in my character. I take full responsibility; I will be donating some of my own money, and I will not be taking profit before the debt is paid.” “the company has committed to operating at a fractional reserve until it can replenish the losses itself.”
Ultimate Outcome
Owner busoni came clean about the withdrawals and balance shortfall of all users on the platform.
I take full responsibility for this and am committed to repaying the debt of BTC. The exchange funds are 12.3% short. Because there is not enough BTC to cover everyone's balances, all balances will temporarily be deducted by 12.3%. Please understand that this is an absolute necessity--if I did not make this adjustment, people would most likely withdraw all their BTC as soon as possible in order to make sure they weren't left in that remaining 12.3%. Aside from the obvious drawback of most of the BTC being taken out of the exchange, this would not be fair--some people would get all of their money right away, and a few would get none right away.
The incident was ultimately included in lists compiled by Bitcoin Magazine[1], Kyle Gibson[2], the Bitcoin Exchange Guide[6], and Slowmist[7].
Updated Homepage
The Poloniex homepage following the incident appeared to take a more security-focused approach. In terms of security, Poloniex promised to ensure the safety of customer funds by keeping the majority of them in cold storage[9]. The entire exchange reported undergoing continual audits and inspections to detect any unusual activity, with two-factor authentication available for added protection[9].
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 Infographic: An Overview of Compromised Bitcoin Exchange Events - Bitcoin Magazine (Jan 30, 2020)
- ↑ 2.0 2.1 100 Crypto Thefts: A Timeline of Hacks, Glitches, Exit Scams, and other Lost Cryptocurrency Incidents - Kyle Gibson (Jan 25, 2020)
- ↑ BTC Stolen from Poloniex - BitcoinTalk (Mar 1, 2020)
- ↑ Crypto Exchange Hacks in Review: Proactive Steps and Expert Advice - CoinTelegraph (Mar 2, 2020)
- ↑ Top 6 Biggest Bitcoin Hacks Ever - CoinSutra (Mar 2, 2020)
- ↑ 6.0 6.1 Bitcoin Scams and Cryptocurrency Hacks List - BitcoinExchangeGuide.com (Mar 5, 2020)
- ↑ 7.0 7.1 SlowMist Hacked - SlowMist Zone (Jun 26, 2021)
- ↑ 8.0 8.1 8.2 8.3 8.4 Poloniex Homepage Archive March 7th, 2014 11:24:34 PM MST (Accessed Mar 4, 2024)
- ↑ 9.0 9.1 9.2 9.3 9.4 9.5 9.6 9.7 Poloniex Homepage Archive October 11th, 2014 3:51:50 PM MDT (Accessed Mar 4, 2024)