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IOTA

IOTA Halts Network While Investigating Trinity Wallet Fund Thefts

In an attempt to protect users from losing more funds in an ongoing attack, IOTA Foundation has suspended the IOTA distributed network, for the time being, the firm announced late Thursday. 

The nonprofit advised users to stop using their Trinity Wallets, while also stating that it has temporarily shut down the network’s Coordinator node. It was designed to validate transactions and protect the network against attacks. 

On their website, the current status of the IOTA mainnet is denoted as “Not Operational” as shown below. 

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This action, according to the foundation, will ensure that no more funds are stolen until they are able to investigate the flaws causing the thefts. You Might Also Like:

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  • “After an initial investigation, we decided to turn off the Coordinator to make sure no further theft can occur until we find out the root cause of these thefts. Further investigation taking place from here on,” IOTA said in its status update page. 

Multiple Theft Reports

Before shutting down the network, IOTA announced on Wednesday that they are investigating suspicious situations with the Trinity wallet. Trinity, developed by IOTA, was initially released in July 2019 as a secure software wallet for storing IOTA tokens. 

The German-based foundation said they had received several reports of stolen funds from users who have recently used Trinity. Thus, the move to warn users not to open or use the wallet on desktop until further notice. 

Working With Authorities

The foundation said they have been analyzing the attack patterns with their newly developed kits. As the probe continues, IOTA said they are also working with cryptocurrency exchanges, law enforcement agencies, and cyber forensic experts to investigate the coordinated attack. 

As per the feedback from some exchanges, no part of the monitored funds has been transferred to another wallet or liquidated.  However, IOTA said they will keep users updated with the progress of the investigations. 

Eliminating Centralization

The foundation plans to introduce a new feature on its mainnet called Coordicide to eliminate the centralized nature of the network. Once the Coordicide becomes fully active, IOTA will be able to function without a central coordinator. 

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Despite Network Outage, IOTA Investors Continue to “HODL”

IOTA recently had to shut down its network due to an attack on its official wallet, Trinity. Despite the significance of the outage, a recent poll suggests that investors will not sell their holdings once the network is reinstated. 

IOTA Holders Remain Positive 

On Feb. 13, the IOTA Foundation was obligated to turn off the Coordinator, a system that checkpoints valid transactions, following a vulnerability exploit in its Trinity wallet. 

Thus far, ten victims have been identified and the losses are estimated to be between $300,000 and $1.2 million worth of IOTA.

Due to the network outage, nobody can send or receive IOTA at the moment. Nevertheless, investors do not seem bothered about this fact. 

Julian Hosp, co-founder of Cake DeFi and I-Unlimited, conducted a Twitter poll asking IOTA holders whether they plan to sell or hold their tokens once the network is back online. Out of the 1,610 respondents, 67.5% percent said they will continue to hold their tokens while only 32.5% showed their intent to sell. 

A Twitter user under the pseudonym C4chaos affirmed that he will remain a “HODLer” and is currently waiting to move his tokens through the “seed migration tool.” He insisted that if IOTA is able to resolve this issue he would likely become a “perma bull” and buy more tokens in the event of a sell-off. 

Along the same lines, another Twitter user said that “sellers are already gone, because they could’ve sold their IOTA at the exchanges.” He believes that those who kept their funds in the Trinity wallet are long-term investors and will continue to hold their tokens until their investments flourish. 

Although IOTA holders appear positive, there is a high probability of a sell-off after the network is reinstated, according to Hosp. 

A look at IOTA’s price chart could give a better idea of where this cryptocurrency could go if the selling pressure behind it increases.

Strong Support Ahead

Based on its 12-hour chart, IOTA is sitting on top of a significant support level presented by the 100-twelve-hour moving average (MA). If investors indeed rush to exchanges to sell their holdings once the network is back online, this hurdle could break pushing the price of this cryptocurrency down. 

A candlestick close below the 100-twelve-hour MA suggests a move to the 200-twelve-hour MA, which could prevent the price of IOTA from a steeper decline. This support barrier is currently sitting at $0.23. 

If the 200-twelve-hour MA fails to contain the fall, market participants could panic sell their tokens sending the price to $0.20 or $0.15.

IOTA/USD by TradingView

Nevertheless, if the 100-twelve-hour MA continues to hold, the bearish outlook could be invalidated. A spike in buy orders could take IOTA to test the resistance given by the 50-twelve-hour MA. Breaking above this level could send this crypto further up to test the recent yearly high of $0.37. 

It is worth noting that this is not the first time that the IOTA network has been halted. In December 2019, it was briefly shut down for 15 hours due to technical issues rather than a security threat. Following the incident, IOTA’s price appreciated over 16% . 

Now, it remains to be seen how market participants will react once the network is fully functional.

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IOTA HOLDERS URGED TO CHANGE WALLET PASSWORDS NOW

The Rundown

  • MANY IOTA ACCOUNTS MAY BE COMPROMISED
  • FULL REPORT PROMISED 

After releasing an update for their compromised Trinity wallet, the IOTA Foundation is directing users to change their passwords. More steps will soon be announced to ensure funds are secure.

MANY IOTA ACCOUNTS MAY BE COMPROMISED

Last week the Iota Foundation stopped its network, the Tangle, after hackers stole funds from at least ten high-value accounts. The foundation soon tracked the vulnerability to the desktop version of Trinity. 

The foundation states:

The foundation is confident that only users that opened desktop Trinity during the specific date range are at risk. Nevertheless, it has also released an update for the mobile wallet, and is calling on those users to change their passwords out of an “abundance of caution.”

The password change is only the first step in resolving this issue. Users will also need to acquire new seeds, which are the 81 character keys that hold Iota tokens on the Tangle. The foundation promises soon to release a seed migration tool to enable this process. The network will not be restarted until after the tool has been made available.

FULL REPORT PROMISED 

The IOTA Foundation promises a full report on this hack. The vulnerability appears to be connected to MoonPay, a service recently integrated into Trinity that enables users to purchase IOTA directly from within the wallet. The MoonPay feature does not appear in the patched version.14 BTC & 30,000 Free Spins for every player, only in mBitcasino’s Crypto Love Affair! Play Now!

Regardless of the cause, this is a serious breach of the IOTA platform. Although it appears that the hackers did not compromise the core protocol, they may have acquired a large number of seeds. Thus, users that do not use the migration tool will remain vulnerable. 

IOTA holders that have lost funds are encouraged to contact the foundation through its Discord channel. The foundation has stated that it is working on a remediation plan for the theft victims. It is unclear, however, if this plan will involve direct compensation or a chain reorganization. The foundation is also working with law enforcement to help locate the perpetrators. 

This event is one of many incidents of theft that have become common in the crypto space. It is proof positive that blockchain technology remains a work in progress, and that even very secure platforms can be made vulnerable. Before this incident, Trinity had been independently audited and was widely considered extremely safe to use.

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IOTA announces fix for the bug that caused the Trinity wallet hack, Twitter reaction mixed

  • IOTA has said that it is making progress in the hack investigation and is taking the necessary steps to compensate the victims.
  • The hack resulted in the theft of $1.6 million and IOTA was forced to take its Coordinator node offline to prevent further losses.

The IOTA team claims that they have created a patch for the vulnerability in the Trinity Wallet, which caused the recent hack, resulting in a loss of $1.6 million. Following the attack, IOTA’s Coordinator node went offline to avoid further theft.

Regarding the patch, IOTA reported:

We have also remediated the vulnerability in Trinity. The upcoming Trinity update will not function as a final transition tool, as we are still working on bringing the network back to full operation. If you have Trinity installed on your computer, we highly recommend you upgrade to this version when released.

IOTA has also disclosed that it is making progress in the hack investigation and is taking the necessary steps to compensate the victims. As per this Sunday’s update, they are building a real-time fund tracker as a part of an expanded toolset for the network.

Twitter Reaction

Peter Todd:“To protect users, we have paused the Coordinator and advise users not to open Trinity until further notice.”

In case you were wondering if IOTA is centralized. It is. 100%

Dan Barber:

The IF’s response to this downstream vulnerability in a Trinity dependency has been nothing less than immediate, efficient and professional. 

It is the nature of their response that will be remembered by the market, their partners and #IOTA adapters– not the hack.

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