CoinDash CEO Says Ignore the Conspiracies After Coin-Sale Hack

  • Attack during initial coin offering wasn’t a scam, Muroch says
  • Hacking victims, investors will still receive intended tokens

In the often murky and freewheeling world of digital currencies and initial coin offerings, it’s easy to spin this week’s hack of CoinDash’s token sale into a conspiracy, the startup’s chief executive officer says.

Despite the as-much-as $6.6 million theft on July 17 from investors wanting to buy digital tokens from the Kochav Yair-Tzur Yigal, Israel-based company, CEO Alon Muroch said the blockchain-technology company will continue to develop a portfolio tracking service and network for cryptocurrencies and ICOs.

CoinDash was able to raise $6.4 million from the token sale before being attacked, Muroch said. In the hack, investors who had been instructed to pay with the digital currency ethereum were then forwarded to a fraudulent address, which effectively stole the coins. Ether was trading around $165 per coin at the time of the attack, according to CoinMarketCap.com.

"Our vision is still viable," Muroch said in a phone interview Wednesday. "We want to make sure to communicate a message of hope and continuity. There’s still money in the company and we will just double our efforts to make it much more effective."

Here’s what else Muroch had to say about the theft and CoinDash:

What do you say to those who think the hack might be scam?

  • "First of all, it doesn’t really cost anything to create a conspiracy theory. It’s very common in this industry to accuse everyone of being a scammer. We’re doing everything humanly possible to investigate all angles. Every scenario you can think of we’re investigating."
  • "Actions talk louder than words. At the end of the day, that’s what we’ll deliver."
  • "We’re doing our best to answer anyone who raises any questions," Muroch said.

How did the hack happen?

  • The token sale started around 1pm GMT Monday and was expected to last for 28 days or until CoinDash raised $12 million. About 20 minutes prior to the opening, "whitelist" investors were allowed to partake and 148 of these investors sent 39,000 ether ($6.4 million at the time) to token sale’s smart contact address.
  • "And then at 1pm GMT, we planned to start the sale for everyone by exposing the same address on our website," Muroch said. "At that time, the hacker changed the address and put his own and during the following minutes afterward, until we took the site down, people sent ethers to the malicious address. During that time, between 37,000 and 40,000 ethers were collected" (by the hacker).
  • The amount of stolen ether was equivalent to about $6.1 million to $6.6 million, according to prices at the time reported by CoinMarketCap.com. Ether is currently trading higher at around $226 per coin, making the amounts raised and stolen higher at this point.

How long did it take to realize the interference?

  • "We don’t know when the hacking started. The effects of the hacking were, say, shown at around 1pm GMT and we quickly realized that and took the site down."
  • Muroch declined to comment on what time the sale was shut down, citing the company’s ongoing investigation into the hacking.
  • An official police complaint was filed with the cyber-security unit of the Israeli law enforcement agency Lahav, according to a company statement. CoinDash said it has also approached several private cyber-investigation parties.

Will CoinDash do another initial coin offering? What’s next?

  • "We will not do any token sale after this one. We are confident we have enough funds right now to pursue our vision and the products we want to develop."
  • CoinDash launched a test version of its app 10 days before the initial coin offering and had 3,000 users, he said. Muroch declined to comment on timing for the official release of the app.
  • The 39,000 ether raised in the token sale (currently equivalent to about $8.8 million) is the bulk of CoinDash’s current funding, Muroch said.
  • During the ICO, CoinDash offered 6,039 tokens for one ether.

What about investors who sent ether to the fraudulent address?

  • CoinDash has said both investors who sent ether to the correct address and the fraudulent one will receive their intended tokens.
  • Muroch declined to comment on the cutoff time for those who sent ether to the fraudulent address, citing CoinDash’s ongoing investigation of the hack.

When will the token distribution happen?

  • Muroch declined to comment on a timeline for CoinDash token distribution.
  • "In order for everyone to receive their CDT tokens, a new CDT contract containing the same amount of tokens must be created," according to a company statement released Wednesday.
  • CoinDash asks "whitelist" participants to destroy the CoinDash tokens they’ve already received no later than July 23 in preparation for the new tokens. Investors who paid the fraudulent address will need to fill out a form and be verified.
  • "The timeline for the token distribution depends on the fraudulent address contributors and their cooperation providing us with all their information. Assuming full cooperation will be achieved, the distribution will take place next week," the statement says.
  • CoinDash is offering bonus tokens to anyone doesn’t trade their new tokens for 6 months after distribution; the bonus rate hasn’t been disclosed.
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