3.5 Million Worth of Bitcoins Stolen from Coinsecure

Indian cryptocurrency exchange Coinsecure is reporting that it has been hacked and 438.318 bitcoins lost. The tokens are worth $3.5 million at current market rates.

“We regret to inform you that our Bitcoin funds have been exposed and seem to have been siphoned out to an address that is outside our control,” the Delhi based company said in a statement posted on its website.

Coinsecure suspects an inside job and has leveled accusations squarely on its Chief Scientific Officer Dr Amitabh Saxena. In a surprising development, the exchange has urged the police to seize Saxena’s passport to prevent him from fleeing.

Coinsecure is one of the most popular cryptocurrency exchanges in India. This theft is the biggest heist of digital tokens in India.

The tokens were reportedly taken from an offline wallet raising suspicion of an inside job. The private keys for the wallets under the control of the CEO and the CSO. The theft apparently happened while Dr Amitabh was extracting Bitcoin for distribution to its customers.

False Story

CoinSecure says it does not believe the account given by Amitabh. “As the private keys are kept with Dr. Amitabh Saxena, we feel that he is making a false story to divert our attention and he might have a role to play in this entire incident. The incident reported by Dr. Amitabh Saxena does not seem convincing to us,” a filing by the company with the Cyber Crime Cell says.

Before the announcement, users reported not being able to operate their accounts.

The company however assured customers that other funds were secure.

“Our system itself has never been compromised or hacked, and the current issue points towards losses caused during an exercise to extract BTG to distribute to our customers. Our CSO, Dr. Amitabh Saxena, was extracting BTG and he claims that funds have been lost in the process during the extraction of the private keys,” the statement made by Coinsecure’s parent company Secure Bitcoin Traders Pvt Ltd said.

The private keys are said to have been online for several hours according to the police. They are checking if the attack was as a result of a malware infection.

Logins Missing

But in another twist, all the log ins were erased after the attack leaving the police with little or no clues about the hacking.

Coinsecure’s website is currently shut.

The exchange however assured customers that they will get all their funds.

“Irrespective of funds being recovered, we re-assure all our customers that you will be indemnified from our personal funds,” a statement from the company read.

We are working round the clock to restore services and to try and to try to recover all the lost funds, and we shall keep all our users posted on the outcome of the details to ensure utmost transparency, Coinsecure said.

Last week, the Reserve Bank of India issued a directive to banks barring them from supporting cryptocurrency related services. The action has drawn the ire of the large cryptocurrency community there. An online petition against the decision has already gathered more than 26,000 signatures just days after it was launched.

Cryptocurrency exchanges are also reportedly planning to challenge the decision in court.