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Uncertainty in Alt-Coin Markets as Popular Exchanges Suffer Downtime

Last Updated March 4, 2021 4:47 PM
Justin OConnell
Last Updated March 4, 2021 4:47 PM

Two websites, both very fundamental to the functioning of the “alt-coin” market, have been unreliable in the last week for various reasons. First, the website Shapeshift.io believed its infrastructure had been compromised. CEO Erik Vorhees shared this message:

Hello everyone,

We wanted to provide a quick update on our status. Yesterday afternoon, we noticed several pieces of evidence indicating our server infrastructure was compromised and threatened. We made the decision to scrap that infrastructure, and rebuild in a wholly new and safe environment. This is what we are currently engaged in. While we hate having the service offline, it was the safer path. By design, ShapeShift doesn’t hold customer balances, so even in the case of a security breach, there is no customer money at risk.

However, a portion of our own hot wallet inventory funds were taken, but nothing that will interfere with operations once our new environment is online. This is also by design. We’ve built customer protection into our platform – hacks may be inevitable, but customer losses should not be. Not a cent of customer funds was lost, nor could they have been. For those few customers who had a pending order processing with us when we went offline, we’ll get those funds returned to you within 24 hours. Customer support link is below.

Existing in Bitcoinland is a pioneering struggle against many threats and challenges. We’ll use the opportunity to build even bigger, better, and more resilient infrastructure. We’ve been inspired by the immense growth ShapeShift has seen over the past several months, and will get this beast back online ASAP. 

On Sunday Night, Vorhees posted an Update:

We will provide more details later, and likely a full post-mortem of this incident for the public, but for now our forensic work continues.

And indeed,  proper forensic investigation takes some time. ShapeShift’s service will be offline for at least another 48 hours while we continue to work. There is no danger or risk that ShapeShift will not be coming back online, but it needs to be done with diligence. We are learning some interesting things.

I’d like to sincerely thank many in the industry who reached out to us, offering to help and providing valuable intelligence. It has been heartwarming, to say the least.

More details to follow within 48 hours.

Shapeshift, which is based in Switzerland, continued its service upgrade into Tuesday morning. It says it will be down likely for a few days.

By Monday, another popular alt-coin exchange, Poloniex, was down due to an “Error 504” or server timeout. Not much more is known about that event. The website was back online by Tuesday.

Shapeshift marks a particularly transformative evolution in the trading of crypto-currencies. It calls itself an “instant crypto converter” and that’s how it operates. Users did not even have to log in to the website, and they merely sent their Bitcoin or alt-coins to a Shapeshift.io address and provide an address of their own for the desire crpyto-currency and – voila – the transfer happened. The site holds user funds for a tiny amount of time.

Poloniex, a US-based altcoin and Bitcoin exchange, has become a leading crypto-currency exchange, as well. The exchange promises “maximum security and advanced trading features.” 

Both businesses ceased doing business in New York after that state’s BitLicense came into effect.

The downtime had been followed by softness across multiple alt-coin markets, in particularly Ethereum, Monero, Factom, and Ripple. Interestingly, Dogecoin and Litecoin each had increased in price.

Featured image from Shutterstock.