December 13, 2018

Bitmain Files A $5.5 Million Lawsuit Against A Hacker In A Seattle Court

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Bitmain Technologies Limited has filed a lawsuit against a hacker calling himself ‘John Doe’ at the United States District Court Western District of Washington at Seattle. The plaintiff is alleging and complaining that the yet to be identified ‘John Doe’ gained access to Bitmain’s accounts and made away with $5.5 million worth of Digital Assets. The complainant is alleged to have hacked into a Bitmain’s Binance wallet. The crime is said to have happened in April 2018. However, the case was filed on November 7th.

Details Of The Crime

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On April 22, 2018, ‘John Doe’ illegally accessed Bitmain’s wallet. He used the BTC private keys in the accounts to order for the purchase of MANA Coins which at the time had a very small share of the Cryptocurrency market. The hacker basically raised the value of MANA Coins since he offered to purchase the Tokens at a figure that was higher than the market rate in exchange for BTC from Bitmain Crypto wallet from Binance Crypto Exchange.

In addition to ordering for MANA Coins using BTC, the hacker wet further and ordered MANA Coins using ETH. The combined denominated purchases of MANA Coins with ETH and BTC.

’John Doe’ had a Binance Wallet that held MANA Coins. From his wallet, he was able to make sell orders that linked his initiation of purchase orders on the Bitmain wallet account on Binance platform. The complainant, therefore, ended up with BTC and ETH Cryptocurrencies that were much more than the MANA Tokens that Bitmain had received in the transactions.

The hacker’s manipulation of the market was taken a notch higher when he placed a placed a sell order of MANA Coins in the Binance wallet but at a deflated price. He matched the order with a purchase transaction from his ‘John Doe’ Binance wallet to match the deflated sale. In the process, he ended up stealing twice from Bitmain.

The investigation process further revealed that the hacker, after completing the process in the second round, transfected the BTC, ETH, and MANA Coin to a secure personal Crypto Wallet at Bittrex cryptocurrency trading platform.

The Implications Of The Security Breach And Market Manipulation

First and foremost, it is important to point out that MANA Coin is a decentralized virtual reality platform that is owned by its owners. In the month of April when the hacking occurred, the price of MANA Coin surged by nearly 300%. In the period between the hack and May 3rd. The price has however corrected itself and in the following months and the Token is currently listed as the 63rd largest Digital Asset by market capitalization on AltDex 100 Index (ALT100). The index is a benchmark for the top 100 Tokens and Cryptocurrencies.

Before the hack, Bitmain had 890 BTC in its wallet. Afterward, there was only 265 BTC left meaning that the Bitcoin Mining chip maker lost a total of 617 Bitcoin. At that time, BTC Tokens were selling at over $8, 500.

What The Lawsuit Means

Security concerns have been a major concern to Cryptocurrency owners. Hence, going forward, Cryptocurrency holders will be able to rest easy knowing that in case of a security breach, an investigation can yield positive results and the perpetrators can be apprehended and the lost Digital Assets recovered.

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