News update. There are now some queries if Bancor is really decentralized. If it is then cryptocoins in the exchange should not be stolen because the users hold the private keys. The
decentralized exchange also should not be able to freeze any trading or movement of coins, which Bancor can and did.
Bancor is centralized, and maybe the reason why they claim they are decentralized is to prevent their ICO token, BNT, to be classified as an illegal security by the SEC.
Also, the hackers are said to have exploited a backdoor in the exchange that was programmed by the Bancor developers themselves.
Bancor, an Israel-based company runs a ‘decentralised’ exchange called Bancor, ofcourse. In June last year, Bacor became the biggest ICO in terms of raising money. Bancor foundation raised $153 Million in Ether by selling its token BNT. What will Bancor build? A decentralised Exchange.
A year later today, the exchange was hacked and lost about $23.5 Million worth of cryptocurrency.
The exchange said in a statement, “a wallet used to upgrade some smart contracts was compromised”. The attackers withdrew 24984 ETH (~12.5 M USD), PundiX’s NPXS token worth approximately One million USD and BNT, Bancor’s tokens worth approximately 10 M USD.
Bancor has taken its exchange offline while it conducts an investigation. There is no word on when the service will resume.
The fundamental idea behind a decentralised exchange is that the users hold their private keys. Hence, decentralised exchanges don’t get hacked. Bancor has claimed to be a decentralised exchange and strictly speaking it looks like one because user funds remained unaffected in this hack. But there are reasons to categorise it as a centralised exchange which we will get to in a minute.
We have to wait until an official response from Bancor shares more insight. But while we wait, it isn’t a bad idea to glance upon what could be the loopholes that may have led to this hack.
A year ago when Bancor launched, a crypto researcher Udi Wertheimer pointed out the vulnerabilities in the Bancor smart contract in a blogpost. Today, while the real reason for the hack is still under investigation, the vulnerabilities call out on Bancor for being ‘decentralised’.Read the article https://coincrunch.in/2018/07/10/bancor-hack-is-the-compromised-exchange-truly-decentralised/Read the warning from last year https://medium.com/unchained-reports/bancor-unchained-all-your-token-are-belong-to-us-d6bb00871e86