Ex-customers sue Vircurex due to frozen funds

Around $50 000 000 of Vircurex users' founds are still frozen 
15 January 2018   392

Former clients sued the Vircurex crypto exchange four years after it was subjected to hacker attacks. This is reported by CoinDesk.

In a lawsuit filed with the US Federal District Court of Colorado, a former Vircurex client accuses the exchange of breach of contractual obligations, property misappropriation, fraud and illegal enrichment. The lawsuit says that after th exchange froze the withdrawal of funds due to lack of reserves, the funds were reimbursed to only a few clients. At the moment, $ 50 million is on frozen accounts.

According to the submitted claim, the exchange continues to work and within the last four years allowed its clients to make deposits.

In 2014, the stock exchange declared that it was practically insolvent, because lost a serious part of the reserve funds. According to the lawsuit, part of the losses are accounted for "two deliberate hacker attacks, which the stock exchange was exposed in mid-2013." Their contribution was made by customers who withdrew significant amounts from their accounts shortly afterwards.

As a result, Vircurex froze the withdrawal of funds in Bitcoins (BTC), Litecoin (LTC), Feathercoin (FTC) and Terracoin (TRC), later announcing that it would begin paying out frozen funds at the expense of future profits.

The lawsuit says that Vircurex refunded only small amounts and only a few clients, while a significant portion of the funds still remain with the exchange. The last time Vircurex sent funds to its customers in January 2016.

In addition, plaintiff Timothy Shaw states that the exchange refuses to respond to customer requests, although over the past four years, Vircurex customers have tried to contact it several times.

As detailed herein, rather than repay the Frozen Funds, Defendants took steps to string along Plaintiff and the Class with deceptive statements and false promises, and made efforts to cover their tracks and create impediments designed to deter accountholders from bringing suit to recover the Frozen Funds, and efforts to ultimately attempt to vanish without a trace.
 

Lawsuit against Vircurex

mong the actions that Vircurex tried to prevent the claim - a statement that the company is registered in Belize (although it is not so) and may be located in Beijing. The lawsuit notes that in fact the company is located in Germany. However, it was not registered in any jurisdiction, which means that no state recognizes it as an official company.

Bitcoin Gold hit by Malicious Miner`s Double Spend Attack

An evil-minded miner efficiently made a double spend attack on the Bitcoin Gold network, making BTG at least the third altcoin to succumb to a network attack
23 May 2018   124

Edward Iskra, Bitcoin Gold director of communications first admonished clients about the attack on May 18, reporting that an evil-minded miner was using the exploit to steal means from cryptocurrency exchanges.The miner bought at least 51 percent of the network’s total hashpower, which provided them with temporary control of the blockchain. Gaining this much hashpower is extremely expensive — even on a smaller network like bitcoin gold — but it may be monetized in tandem with a double spend attack.

The attacker, after getting the control of the network, started depositing BTG at crypto  exchanges while also intending to send those same coins to a wallet under their control. Generally, the blockchain would resolve this by including only the first transaction in the block, but the attacker managed to reverse transactions as they had majority control of the network.

As a result, they were able to invest funds on exchanges and withdraw them again soon, after which they repealed the initial transaction. This way they could send the coins they had primarily deposited to another wallet. 

An address of bitcoin gold connected with the attack has got more than 388,200 BTG since May 16 (basically from transactions it sent to itself). All of those transactions were associated with the double spend exploit, the attacker could have stolen as much as $18.6 million worth of funds from exchanges. The last transaction was sent on May 18, but the attacker could resume it if they still have access to enough hashpower to reach the control of the blockchain.

Bitcoin gold’s developers recommended exchanges to resist the attack by reaching the number of confirmations acquired before they lended deposits to client accounts. Blockchain data displays that the attacker reversed transactions as far back as 22 blocks, allowing developers to advise raising confirmation requirements to 50 blocks.