Vircurex Exchange Hack
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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][4][5]
About Vircurex
"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.” Yet more of its reserve funds were depleted by large withdrawals by some of its customers." “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.”
This exchange or platform is based in Germany, or the incident targeted people primarily in Germany.
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 |
|---|---|---|
| January 1st, 2013 12:00:15 AM MST | Main Event | Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here. |
Total Amount Lost
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?
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)
- ↑ Former Customers Sue Crypto Exchange Vircurex Over Frozen Funds - CoinDesk (Feb 29, 2020)
- ↑ Exchange Vircurex Freezes Withdrawals, Claims Lack of Reserves (Feb 29, 2020)
- ↑ Bitcoin Scams and Cryptocurrency Hacks List - BitcoinExchangeGuide.com (Mar 5, 2020)