Fifty Million Stolen NXT Ransomed by Hacker to BTER Exchange

Journalist:
August 15, 2014

Update: NXT developers announced to CCN that there would be no rollback. To view the announcement, visit our article here.

This morning, around 50 million NXT was stolen from the popular cryptocurrency exchange BTER. The number is outstanding, as the amount stolen is near five percent of all NXT in existence. The proof-of-stake coin’s community is now faced with a difficult decision that Vericoin developers faced a few months ago when hackers stole Vericoin from Mintpal. Either NXT allows the thief to get away with the funds, or they rollback the blockchain to just before the theft transaction occurred.

Then, the hacker did the unexpected. He ransomed the coins.

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“This is the dev of BTER. I am really sorry for this,” Developer Lin said on the official NXT forum just after the announcement of the theft. “Several hours ago one of our hosting accounts was hacked and the hacker got 50m NXT from this server. It’s totally our fault and we are trying our best to cover all the loss. However 50 million NXT is huge for us, we cannot afford it at the moment.”

Because of the massive amount of loss, Lin is asking the developers of NXT to roll back the blockchain, a highly controversial move in the cryptocurrency world.

“We are trying to get help from the dev and the community to agree to roll back the blockchain to 3-4 hours ago. We are going to cover all the loss due the roll back,” Lin said.

Rolling back the blockchain is something that another cryptocurrency Vericoin had to do before. An exchange called Mintpal was hacked, and the thief got away with a staggering amount of Vericoin, putting the developers in a tough decision. Develop Patrick Nosker spoke with CCN a while back, explaining their decision. At the end of the day, they decided to roll back their blockchain and prevent the theft, a decision applauded by those who lost coins, but created controversy among the rest of the cryptocurrency community.

“I think it is good to stop thieves,” one NXT community member said. “But the way you ask for should be a ‘one-time solution’ otherwise trust in NXT will get destroyed.”

Then, the plot thickened.

Cue The Ransom

Suddenly, the hacker sent a public message to BTER offering a ransom on the coins. “We can trade these NXT for some bitcoins to make life easier for you, and me,” the anonymous thief said.

The community reacted, calling for a BTER to make a deal with the hacker somehow instead of rolling back the blockchain. BTER entered negotiations, and reportedly sent 100 BTC in exchange for the NXT, but only received five million NXT in return. While it’s unfortunate for BTER and the community, the hacker is supposedly still in negotiations with BTER after hours of debate.

BTER has not yet released a statement on the ransom negotiations.

NXT Developers Offer Rollback

Next in this NXT debacle, the developers have offered a roll back update that users can switch to if they so choose. The move offers a bit of democracy among the community rather than forcing a switch. The roll back does come with a nice caveat though, as it will only roll back the transactions for BTER, not the entire blockchain.

As the developers of BTER and NXT release statements and the events develop, CCN will continue covering the story.

Last modified (UTC): August 15, 2014 22:46

Clay Michael Gillespie @thelivingaspect

Clay Gillespie a writer and reporter for many different platforms across the tech industry. He holds a B.S. in Public Relations from Ball State University, and freelances for different clients in technology and cryptocurrency. For more information, visit his personal website, claygillespie.com.