Is CoinSecure Scandal Real Or Pulling An Exit Scam? : 438 BTC Lost ($3 million)

Is CoinSecure Scandal Real Or Pulling An Exit Scam? : 438 BTC Lost ($3 million)
Sudhir Khatwani

CoinSecure Bitcoin hacking

Has Coinsecure, the Indian Bitcoin Exchange pioneer, hit the dead end?

I hoped not, but the reports and stories are not so welcoming.

Big News: Coinsecure, the Indian Bitcoin exchange, is in trouble. Whether it has either been hacked or its bitcoins have been stolen is still debatable.

Firstly, for the newcomers, let me introduce you to Coinsecure.

Headquarters: Delhi
Founding Year: 2014
Founders: Mohit Kalra, Benson Samuel

Coinsecure needs no introduction, at least not to the Indian audience. It is one of the early movers of Bitcoin and blockchain technology in India. For years together they have provided an easy to use Bitcoin exchange, merchant services, a blockchain explorer, as well as a hosted wallet.

They are also the pioneering exchange in India to keep order books for bitcoins to make an effective marketplace for Bitcoin buyers/sellers.

By doing all this, Coinsecure had garnered quite some respect in the Indian Bitcoin community, but Coinsecure is in deep waters after yesterday's news.

Yesterday, in a letter to its users, Coinsecure admitted that the rumors of it being hacked or compromised in insidious ways are true.

According to Coinsecure, 438.318 BTC worth approximately $3 million have been lost and transferred to a Bitcoin address that Coinsecure doesn't control.

The note also elucidates that this loss is not a direct result of their infrastructure being compromised or hacked but instead it was due to their CSO Dr. Amitabh Saxsena extracting Bitcoin Gold from Bitcoin. And as a result, their CSO claimed that bitcoins were lost.

Here is the full note from Coinsecure:

Coinsecure Bitcoin Theft

On 9th April 2018, the CSO informed the Coinsecure management that 438.318 BTC were stolen from the company's wallet as a result of an attack.

But the question is, how can it be when the CSO himself had the private keys.

Well, just like you and me, the Coinsecure management has refused to believe the CSO's version of the story and have lodged an FIR against him with the Cyber Cell, Delhi. The CSO is on the run as experts investigate the case.

Here is the copy of the FIR:

Coinsecure Bitcoin Stolen

Questions And Some More Questions

The first question that I have for Coinsecure is, why on earth would an exchange not use a multi-sig wallet to secure their funds. How can they trust one single person with private keys?

Another assumption is if it was a multi-sig wallet then who is the other party involved or is it a planned exit scam from the market and the FIR a gimmick for distraction?

Of course, we understand that Coinsecure has mentioned about refunding the losses to its investors from its own pocket if needed, but how and when will it happen? Do they simply want to start another Ponzi token economics drama just like Bitfinex did after its hack?

More so, with the investigation, if it gets evident that they did not have a multi-sig wallet, it would be a huge question mark on their ability to run an exchange. If their multi-sig wallet was under theft, it will again raise many questions as to who else was involved in this heist.

Believe it or not, this is a big blow to the Indian Bitcoin and cryptocurrency market after RBI banned banks to deal with Bitcoin businesses and individuals last week: RBI Bans Indian Banks From Facilitating Services To Crypto Related Individuals & Businesses.

Lastly, I repeat, don't keep your Bitcoin in any centralized exchange in the world because they are not safe. Always rely on self-hosted Bitcoin wallets where you control your private keys such as:

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