Bitbns Admits To $7.5 Mn Hack In 2022, Says Nothing Abnormal

Hours after reports surfaced that Bitbns was trying to hide a $7.5 Mn hack, crypto exchange founder Gaurav Dahake conceded that the startup was, indeed, compromised back in 2022, adding that it wasn’t an abnormal scenario. 

This comes hours after crypto researcher ZachXBT tweeted that the exchange was likely covering up the hack that happened last year, under the guise of a system maintenance.

Responding to the hacking allegations, Dahake went live on YouTube and claimed that most big exchanges had witnessed such incidents, adding that Bitbns also saw a ‘small incident.’

He further added that the platform witnessed ‘irregular activities ‘ right before the hacking incident, which prompted the startup to take the exchange offline for a few minutes to analyse the issue. 

“We found issues with specifically a few token prices, there was a difference in buying and selling prices. At that point in time, some users were trying to withdraw funds. We wanted to analyse the funds and found on one particular address, (a) certain amount of funds went from different tokens and those got converted into Ethereum and went to different addresses,” added Dahakae.

While the cofounder did not ascertain the amount of assets impacted in the alleged hack, he brushed off the hack as supposedly not abnormal among crypto exchanges. Dahake also added that crypto platforms regularly improve their security systems after such incidents and that Bitbns has been functioning ‘seamlessly’ in the aftermath of the cyber attack. 

In February last year, Bitbns temporarily took down its systems citing system maintenance. It has now come to the fore that Bitbns’ system was taken offline after the company staff noticed a ‘surprisingly high throughput’ on their servers. 

Subsequently, the exchange found that the price of Polygon, BNB and Aave tokens were incorrect and there was a huge discrepancy in the buying and selling price of these tokens. The team also flagged anomalies in withdrawals. As a result, the team took the entire platform offline immediately. 

This is not Bitbns’ first brush with controversy. Earlier last year, it had also lashed out at ‘relevant’ Indian authorities for delays in withdrawals. While, since then, it has resumed withdrawals, the crypto hack has emerged as a new piece to its controversial saga. 

A slew of issues has bogged down crypto exchanges in the country in the recent past. While RBI top brass has openly called cryptocurrencies a threat to India’s financial stability, the government has introduced a heavy taxation regime to dissuade users from investing in virtual currencies. 

Be it 1% TDS or 30% tax on profits from crypto transactions, a slew of institutional norms have pummeled the volumes of Indian crypto exchanges. The centre’s concerns have largely been led by issues related to cryptos such as money laundering, financing of terrorism, no oversight and dollarisation of the economy.

Add to that, the controversy surrounding the Indian crypto startup ecosystem have also made investors wary of investing in the space. Be it the infamous WazirX-Binance saga or raids at the offices of almost all major crypto exchanges, the space has been under intense scrutiny this past year. The space has also witnessed cyberattacks globally which have seen hackers decamp with millions of dollars from crypto exchanges. 

While the crisis unfolds, it remains to be seen whether these players tide over the challenge or will they collapse under their own weight. For now, the challenge remains to be restoring user trust and blunting the force of government’s norms.