Poly Network was launched in June and went on to become an instant hit in the cryptocurrency market, becoming the 15th largest cryptocurrency within a month. About two months later, hackers accessed its website and were able to steal digital tokens worth $600 million.
According to the official statement from Poly Network, hackers stole 2 billion tokens through API access due to a coding error. The company claimed it is cooperating with law enforcement agencies on a full investigation into the breach but did not disclose details of how much each token is worth at this time.
Read More »Poly Network tokens are reportedly backed by gold bars and other precious metals. In May, Poly Network announced its plans to build a new exchange that would allow users to trade in gold-backed tokens versus fiat currencies.
The cyber-security firm that helped Poly Network with the investigation of the hack is CipherTrace, which specializes in blockchain forensics. CipherTrace was founded by Tyler Sosin, who formerly served as a chief security officer at Citigroup and a senior cyber-security consultant for the U.S. Department of Defense.
An American cryptocurrency trader, whose trade triggered a multi-million dollar theft of Poly Network tokens, said he did it “for fun.” The hacker successfully stole $600 million worth of Poly Network tokens from two exchanges. One of the traders was later identified as Jake Yocom-Piatt, and the suspect is currently being investigated by the FBI.
The suspicion that this hack was carried out for criminal purposes has not been confirmed yet.
Jake Yocom-Piatt said he took part in the attack because he wanted to see how easy it would be to steal. “It was just good old school trading,” he told the Washington Post.
The hacker managed to access the Polymath platform’s API, stole $600 million worth of tokens, and sent them to different exchanges in Asia. One exchange then transferred it to Binance, which gave an address where he could transfer his stolen cryptocurrency.
The trader told the press that he did not feel bad about the hack whatsoever. “I didn’t do anything illegal. I didn’t do anything unethical,” he said. He also said he knew that the price of the tokens on his exchanges could change at any minute.
“I generally do not trust crypto exchanges, but in this case, I had three different ones (and) it appears there was at least one issue with all of them,” said Yocom-Piatt to the Washington Post. “I don’t blame them for my loss, but it is good to know that there is a problem with these exchanges.”
Poly Network’s director, who has not been named, told the Washington Post that Poly Network is very grateful for the help from the FBI and believes that law enforcement will do everything that is within their power to arrest the hacker.
Thomas Caldwell, a deputy assistant director at the Cyber Division of FBI, said the bureau takes these hackings very seriously because they pose a serious threat to U.S. trade. “We are aware of this matter and are looking into it,” he told the Washington Post in an email statement.
Polymath and Poly Network are both registered in the Cayman Islands, which also houses several other cryptocurrency exchanges. Polymath co-founder Trevor Koverko said it was “unusual” for the hacker to go after just one exchange. “This is not anyone that I’ve ever heard of before with this background,” he said. Polymath’s website currently only displays a white screen, and it is not clear when the platform will be back online.
Polymath has been accused in the past of being linked to the company behind the initial coin offering (ICO) for the fraudulent project Telcoin. Polymath also reportedly received $15 million from Tyler and Cameron Winklevoss, who founded cryptocurrency exchange Gemini. Both twins are also associated with another scam called “The DAO.”
Polymath’s white paper claims that it will allow users to create their own digital assets, an idea that has gained a lot of traction since the tokens used to back them were being stolen left and right. The company also claims that it will allow users to distribute and trade digital assets.
The Poly Network website lists Gold as a cryptocurrency along with Bitcoin, Ethereum, and other major cryptocurrencies currently in circulation on the market today. Poly Network was reported to be worth $2 billion in mid-May 2018.
Around the time of the alleged hack, Poly Network was reportedly worth about $7.4 billion according to Bloomberg. Polymath’s website is currently down and has not been updated since April 2, 2018. The Polymath website’s contact email address appears to be invalid.
Currently, Polymath’s status as security is uncertain, as it appears the SEC may have classified the initial coin offering as an unregistered securities offering. The legal status of initial coin offerings is currently unclear.
