Eth continues to move from crisis to crisis with the latest blow to the digital currency the hacking of an early and significant investor, Bo Shen, Founding Partner of Fenbushi Capital, a $50 million blockchain focused venture capital fund by Wanxiang, one of China’s giant conglomerates.
According to Jack Peterson, an Augur developer, someone gained access to Shen’s phone number by social engineering the telecom provider. They used that access to take over his e-mail via a recovery number method. Once they gain access to both, the hacker would have been able to access numerous service providers through password resets.
It is not clear how much was stolen, or when, but we are told that the theft was limited to Shen’s personal holdings only. Wanxiang or any of its entities, which have invested substantially in Eth, are not affected according to Ada Xiao from Fenbushi Capital.
Price took a dive on the news, falling below $6, to then recover, currently trading above $7, seemingly continuing a downwards trend for much of autumn as the nascent currency faces crisis after crisis.
It is currently far too early to speculate on the effects of this latest hack on the digital currency as the focus is understandably on the hack itself. However, Bo Shen and Wanxiang have been strong supporters of Blockchain Technology more generally, and Ethereum as well as Zcash more specifically. They organized Shanghai’s Global Blockchain Summit last year as well as this Autumn, making them arguably the most influential Chinese entity as far as this space is concerned.
As the theft is limited to personal holdings only, hopefully any change in attitude towards the digital currency will also be limited. According to Shen’s Linkedin profile, he has been involved in this space since January 2013 advocating or advising for Bitcoin, Ripple, Bitshares, Ethereum, Augur, Factom. It is unlikely, therefore, that he would now outright dismiss digital currencies, but might take a more somber view, especially regarding its biggest weakness, security, first spectacularly shown to the world with the hack of MT Gox in 2011. Since then, it appears little has changed as the Bitfinex hack, DAO hack and now the hacking of a prominent investor in digital currencies, shows.
As these events periodically remind us, although blockchain technology has many benefits, it also has weaknesses. The frenzy of this summer, therefore, will probably give way to a more somber winter, as rose tilted glasses are replaced with a more realistic view of the nature of this new invention, its limitations and its advantages.
Images from Shutterstock and Poloniex.
Last modified: May 21, 2020 10:11 AM UTC