Slovenian-based bitcoin-mining marketplace NiceHash, in a recent update, said that the company has so far managed to reimburse its clients 60% of some 4,700 bitcoin stolen. The company had suspended operations in December 2017 after $64m worth of bitcoin was stolen by hackers. The investigation of the same still continues.
The story behind the bitcoin hack
NiceHash was a digital currency marketplace that matched people looking to sell processing time on their computers for so-called miners to verify bitcoin users’ transactions in exchange for the bitcoin. Troubles with the website drew alarm and complaints, with many bitcoin owners posting panicked comments on NiceHash’s social media accounts.
With respect to the complains, the marketplace had suspended operations in December 2017 while it investigated the breach, saying it was working with law enforcement as “a matter of urgency” while urging users to change their passwords. The hack was “a highly professional attack with sophisticated social engineering” that resulted in approximately 4,700 bitcoin being stolen, worth about $63.92m at current prices, said NiceHash head of marketing Andrej P Škraba.
NiceHash had also issued an official statement which said,
“We understand that you will have a lot of questions, and we ask for patience and understanding while we investigate the causes and find the appropriate solutions for the future of the service.”
According to NiceHash, the hack that took place in early December was the result of a security breach into the NiceHash payment system. Shortly following the incident, NiceHash announced on Reddit:
“Our payment system was compromised, and the contents of the Nicehash Bitcoin wallet have been stolen. We are working to verify the precise number of BTC taken.”
The platform was offline for two weeks in the wake of the attack.
Following the hack, NiceHash co-founder Marko Kobal stepped down from his position as the company’s CEO, saying in a LinkedIn post that he would now “stand aside and allow new management to lead the organization through its next, exciting period of growth.”
The reimbursement plan
NiceHash originally announced the reimbursement plan two weeks after the hack in a message to members of its platform, although balances have clearly not been restored by the date initially promised:
“We are happy to announce we have been able to reserve the funds required to restore balances from a group of international investors. Old balances will, therefore, be restored by January 31, 2018.”
On January 31, 2018, the company announced using its Twitter handle,
“The Repayment program will start on Friday, February 2, 2018, and will initially reimburse 10% of the old balance amount to all users that were impacted by the security breach.”
The news you’ve all been waiting for 👉 https://t.co/KfQ8HDvhTx 💪
The Repayment program will start on Friday, February 2, 2018, and will initially reimburse 10% of the old balance amount to all users that were impacted by the security breach.
— NiceHash (@NiceHashMining) January 31, 2018
It also said that “ We are committed to periodically repay the remaining amount to all users in the coming months.”
We are committed to periodically repay the remaining amount to all users in the coming months.
— NiceHash (@NiceHashMining) January 31, 2018
According to the details of the repayment program, the company divided the repayment scheme into two parts one for the NiceHash internal wallet users and external wallet users that were affected by the security breach. The Repayment program was started on Friday, February 2, 2018, and was to initially reimburse 10% of the old balance amount to all users that were impacted by the security breach.
NiceHash said that it was committed to periodically repay the remaining amount to all users in the coming months. This means all users will be fully reimbursed, at the same time and under the same conditions. Every new part of the reimbursement program will be announced in advance and users will be able to monitor repayment progress. If any user notices that they had not received any respective payment, such were asked to immediately notify NiceHash in order to receive such payment. The old balance will be repaid in Bitcoin (BTC) and not in the fiat value or any other cryptocurrency.
With respect to the investigation of the hack the company had notified in the same update saying that
“The investigation on the security breach is still ongoing, with the support of international law enforcement and cyber forensic teams, and while we want to be as open and transparent as we can, for reasons of ongoing investigation we can’t provide many details at this time. We are in active discussions with investors, but this process will require more time and due diligence than originally anticipated.”
After Mt Gox news, this news of reimbursement is another booster for investors that have lost money. Another step that can help restore the faith of community in crypto firms. With 60% reimbursement already done, Nicehash seems to be clearing out dues completely in the next few months.
Have the companies dealing in cryptos learned from the Mt Gox and Nicehash hacks? Do let us know your views on the same.
Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.