Posted on December 16, 2019 at 8:12 AM
VeChain Rocked by Buyback Wallet Hack
VeChain, a blockchain-enabled platform that provides a secure supply chain management structure, experienced a breach in their buyback wallet system. The $25 million buyback plan, recently launched in July, intends to aid their vision of creating valuable dealings as part of community development.
With such a large hitch so early into the introduction of this blockchain-as-a-service(BAAS) platform, this brings into question the issues that come with blockchain bloating – a substantial growth in blockchain systems that make it increasingly difficult to manage.
What Happened?
Hackers managed to transfer approximately 1.1Bn in VET, VeChain Token, tokens to their accounts. The token-based system losses were valued between $6.5-6.7 million, causing a $5 loss on their market cap.
This decrease in their total market value, from $325 million to $320 million is a 4% drop in the firm that relies heavily on its Ethereum-built blockchain application.
VET, the ‘Future’ of Cryptocurrency
VeChain is well-known for its futuristic dual-token system. The first part of this duo, VET, allows for transactions to be performed on decentralized applications, allowing for core protocols that facilitate multi-party payments and transactions in a controlled ecosystem.
The second part is VTHO, VeChainThor Energy, which powers transactions on the platform. VTHO is what is consumed and allows for the performance of smart contracts. It’s what drives this ecosystem.
The dual-token system was meant to create a more effective funding model, as there would not be one centralized repository, but it did not do much to deter the diversion of tokens. Though breaches of this nature are not uncommon, this counts as a huge loss in comparison.
VeChain currently circulates approximately 55 billion coins, meaning that the stolen 1.1 billion accounts for 2% of the foundation’s total supply. The methods through which the hacker was able to compromise the buyback wallet still remain unknown. The firm continues to track the source of the hack while attempting to mitigate losses.
Beating the Crisis
In a bid to subdue panic and calm fears, the VeChain Foundation made an announcement regarding the breach. In it, the foundation stated that they would “monitor, blacklist and freeze any funds coming from the hacker address”.
The 5 -point press release also addresses the measures the firm is currently taking to uncover the number of factors that led to these circumstances. Apart from a filed report with Singaporean police and an internal investigation, they plan to join forces with Hacken and engage the vechainstats.com and whitehat communities for assistance.
They also plan on immediate vetting and verification of other assets in order to alleviate any further breaches. At this point, there seems “highly probable theory” of misconduct.
The concept of human error does entice one to lean towards the claim, with VeChain citing that Standard Procedure might not have effectively been performed. However, the firm and authorities are still working on probability as we continue to follow updates and await the final outcome.
