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Cryptocurrency companies are ‘indifferent’ to security

Mark Karpeles, former CEO of Tokyo-based cryptocurrency exchange Mt.Gox (Japan), said a lack of investment in security has left the industry vulnerable to attacks.

Up to this time of the year there have been two of these cases Cryptocurrency robbery biggest world is recognized. One of them is the case of stealing more than 600 million USD worth of altcoins from the famous crypto game system Axie Infinityat the end of March 2022.

Even though 8 years have passed since a theft Bitcoin famously crashed the Mt.Gox exchange, but according to Mr. Karpeles, “structural risk” is still a big problem today. The structural risk behind the bridge, which is so important to Axie and other crypto services, makes it easy for hackers to break in and steal assets.

Cryptocurrency companies are still 'indifferent' to security - Photo 1

Mr. Mark Karpeles, former CEO of cryptocurrency exchange Mt.Gox


In Axie’s case, the attacker took control of a small number of computers, called validators, in a bridged system that was responsible for verifying withdrawals and deposits of cryptocurrencies. The role of a validator is to keep the blockchain secure, but it can also be hacked to commit fraud or theft.

“Being a bridge means being trustworthy, but anything that requires trust is vulnerable,” Karpeles said. According to Mr. Karpeles, technology Cryptocurrencies must evolve to remove the need for validators in transmitting data across networks blockchain difference

The attack is aimed at Axie Infinity highlights the potential pitfalls of cryptocurrency, even as it has grown into a $2 trillion industry, attracting the attention of investors and companies around the world. Sky Mavis, developer Axie Infinityon April 6 admitted that the “root cause” of the attack was a small fraction of validators.

“Companies don’t see the benefit of improved security. They don’t know the cost of being attacked until they are actually attacked,” Karpeles said.

Launched in 2010, Mt. Gox was once the largest Bitcoin exchange in the world, handling around 80% of global transactions at its peak. However, the company had to file for bankruptcy in 2014, after an attack damaged 850,000 Bitcoins, which was worth $480 million at the time. Although most of the Bitcoins were lost from exchanges, around 200,000 Bitcoins were eventually recovered from Mt.Gox’s cold wallets, which store assets that are not connected to the internet.

Mt.Gox has been plagued with a multi-year process because creditors could not agree on a payment process. As the Bitcoin price continues to rise, claimants have demanded payment in Bitcoin instead of cash. In 2017, the company converted 50,000 Bitcoins into cash to pay back creditors for the first time. Last year, the Tokyo District Court and the creditors of Mt.Gox finally reached an agreement to distribute the remaining 150,000 Bitcoins, worth about $6.5 billion according to the value of the April 7 transaction, to 200,000 creditors. all over the world. Payback times are closely watched by investors, fearing that a quick distribution could lead to a sell-off, sending Bitcoin prices lower.

Once the debt is settled, the story of Mt. The once-popular Gox will be completely closed. Mr. Karpeles is currently working on a new project to help improve transparency and security standards in the industry. He founded UNGOX, a Delaware (USA)-based cryptocurrency company that specializes in rating exchanges, decentralized financial services (DeFi) and other crypto-related projects.

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