News NFT Marketplace Says $4.5 Million in Crypto Has Been Stolen

[Admin]

Vulcan Forged said that 4.5 million of its PYR cryptocurrency have been stolen from 148 compromised wallets.

NFT Marketplace Says $4.5 Million in Crypto Has Been Stolen : Read more

 

[husker]

So... dumb question here. What makes some cryptocurrency ripe for stealing while the rest remains safe (or is it)? Was this an inside job? Was "Vulcan Forge" at fault? Why bother spending time and money mining when you can just pluck it out of a supposedly safe wallet?

 

[InvalidError]

So... dumb question here. What makes some cryptocurrency ripe for stealing while the rest remains safe (or is it)?

Nothing in particular, just people finding flaws in crypto exchanges and exploiting them to route crypto to their own wallets. They may or may not have help from the inside. Since most countries don't recognize crypto as a currency, stock, future or any other form of financial vehicle, none of the usual banking, securities and other protections apply, so the people who run these exchanges have low to no liabilities for lax security.

Expect stories of people getting fleeced by crypto exchanges to be a recurring theme indefinitely.

 

[Endymio]

Since most countries don't recognize crypto as a currency, stock, future or any other form of financial vehicle, none of the usual banking, securities and other protections apply, so the people who run these exchanges have low to no liabilities for lax security.

Eh? Basic law still applies. If it has value, theft is a criminal act, and failure to provide adequate safeguards can and does result in civil liability. The only caveat is that the majority of crypto thefts are international or even multinational, which complicates the prosecution of such crimes.

 

[InvalidError]

Eh? Basic law still applies. If it has value, theft is a criminal act, and failure to provide adequate safeguards can and does result in civil liability.

Crypto has no formally recognized value in most countries, it is just a fictitious thing people are gambling on. If a crypto exchange goes bankrupt from people filing civil lawsuits, chances are that authorities won't bother sifting through the servers to figure out who owns how much of a share of which wallet when they tear the servers down. If there is a 500M$ heist and the exchange + operators are only worth 5M$, you get ~$0 net back after everyone's own, lawyers and court costs.

 

[Endymio]

Crypto has no formally recognized value in most countries,

Name one.

If there is a 500M$ heist and the exchange + operators are only worth 5M$, you get ~$0 net back after everyone's own, lawyers and court costs.

That's true in countless civil suits, however, and is hardly unique to crypto. Place your million-dollar rental property in the hands of a small management agency who allows it to be trashed, and you'll get nothing whatsover from suing them. Does that mean the home had no value? Of course not.

 

[InvalidError]

That's true in countless civil suits, however, and is hardly unique to crypto.

When you deal with banks and conventional investments, the brokers must have bonds and/or insurance to back liabilities in case they screw up. Crypto is basically a grey-market product that comes with none of those.

 

[Endymio]

When you deal with banks and conventional investments, the brokers must have bonds and/or insurance to back liabilities in case they screw up.

It depends on the investment, of course. There is no insurance on venture capital investment, and even FDIC insurance on bank deposits is limited to smaller accounts: deposit more than $250K, and you can lose every penny beyond that.

Obviously crypto is an extraordinarily risky investment, especially if you have a non-diversified portfolio held by an exchange in a lightly-regulated foreign nation. That in no way implies that crypto itself "has no formally recognized value", or is unprotected by law.

 

[InvalidError]

That in no way implies that crypto itself "has no formally recognized value", or is unprotected by law.

In most markets, crypto is a grey market item. When people trade on the grey market, you are mostly on your own when you get screwed over.

 

[Endymio]

In most markets, crypto is a grey market item. When people trade on the grey market, you are mostly on your own when you get screwed over.

Crypto is no more or less "grey" than any other value-bearing asset. If you place your megayacht or $50M Renoir for sale with an uninsured startup broker in Istanbul, you may well find yourself sorting out the intricacies of international law. Caveat Venditor.

Crypto is not generally recognized as a currency or publicly-traded security, and thus lacks the additional legal protections these are generally granted. That's a different statement altogether, however.

 

[husker]

In most markets, crypto is a grey market item. When people trade on the grey market, you are mostly on your own when you get screwed over.

This makes sense to me. If Tom's Hardware invents "Tom Dollars" based on how many thumbs up a commenter gets and wraps it up in some kind of blockchain security, governments are no more or less obligated to regulate it than cryptocurrency. Crypto was made up out of whole cloth without the input or blessing of government. I don't believe the success or popularity of such a device is relevant to how heavily it is regulated other than the attention it may receive. It is only after the fact that gov agencies may be forced to deal with the theft or other shenanigans. The big difference between bitcoin and "Tom's Dollars" is the actual perceived value (real or otherwise) of the currency or stock or whatever you want to call it. Although stolen crypto could be viewed as something of value that authorities could investigate, since it wasn't set up through government agencies, it may not warrant any more special attention than a stolen scooter, for example.

 

[InvalidError]

Crypto is no more or less "grey" than any other value-bearing asset.

I mean grey market as in neither legal or illegal. Most jurisdictions haven't decided what asset class crypto should belong to, how to tax it or whether it should even be allowed to exist at all in the first place.

If more countries decide to follow China's lead with banning crypto, then crypto will officially become a black-market currency.