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IOTA takes a nosedive following Trinity wallet hack

A vulnerability in Trinity, IOTA’s official wallet, has been exploited resulting in the theft of millions of dollars worth of this cryptocurrency. Although the IOTA Foundation has taken different steps to prevent a further attack, IOTA plunged over 12 percent following the hack.

Trinity wallet has been compromised

On Feb. 12, the IOTA Foundation released a statement indicating that it was investigating a “suspicious situation” with its official wallet, Trinity. The Foundation advised users not to open or use the wallet until further notice.

Later on, the Coordinator, a system that checkpoints valid transactions, was shut down after the exploit was confirmed.

The IOTA Foundation said:

“After 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.”

Following an in depth transaction analysis, the Foundation believes that the issue is related to “seed theft,” but the root cause has yet to be found. They also identified 10 victims with a total estimated loss of $1.6 million worth of IOTA.

Now, multiple cyber forensic experts have joined the investigation team to evaluate different possible root causes and perform a deep scan of all Trinity’s dependencies. Additionally, the IOTA Foundation said to be working with law enforcement to further investigate the coordinated attack.

While it is still unknown what could have caused the exploit in Trinity, investors did not wait to sell their holdings. The price of IOTA took a significant nosedive as the “suspicious situation” was first reported on Feb. 12. Now, it seems like this cryptocurrency could be preparing for a rebound.

IOTA technical analysis

The TD sequential indicator was able to predict that IOTA was bound for a correction on Feb. 12. This technical index presented a sell signal in the form of a green nine candlestick on the 4-hour chart. Following the bearish formation, this cryptocurrency plummeted 12 percent. It went from trading at a high of $0.353 to a low of $0.310.

Despite the major downturn and the importance of the Trinity wallet hack, IOTA seems to be preparing for an upswing. The TD sequential indicator recently presented a buy signal in the form of a red nine candlestick within the same time frame. A spike in the buying pressure behind this crypto could validate the bullish signal allowing it to surge to $0.336 or $0.344.

IOTA US dollar price chart
IOTA/USD by TradingView

Nevertheless, a further increase in sell orders could invalidate the buy signal presented by the TD sequential indicator. Breaking below the recent low of $0.310 could set the stage for a steeper correction. On its way down, IOTA could find support around $0.296 and $0.284.

Moving forward

As the IOTA Foundation continues investigating what could have led to the recent vulnerability exploit in Trinity, it is worth noting that this is not the first time that it faces security issues.

In late 2017, several users reported that IOTA’s official wallet was unstable allowing tokens to be lost or sent to wrong addresses. And, in early 2019, a British hacker was arrested for stealing over $11 million worth of IOTA.

According to Tone Vays, a former Wall Street trader and VP at JP Morgan Chase, this type of exploits would likely continue to happen due to the high levels of centralization in IOTA’s protocol. Time will tell whether the Foundation will be able to make strides towards improving the security of its network and wallets.

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IOTA

IOTA OUTAGE HAS ALREADY OUTLASTED SEVERAL CELEBRITY MARRIAGES

The Rundown

  • 15 Days and Counting with No IOTA
  • In a Bit of a Tangle

IOTA has had things pretty rough lately with the network shut down for 15 days now. According to Crypto Bobby, that’s already outlasted several celebrity marriages – will it ever be switched back on?

15 DAYS AND COUNTING WITH NO IOTA

IOTA is one of those cryptocurrency projects you either fervently get or decidedly don’t. There’s no middle ground as far as it’s concerned. Its Tangle technology is either a brilliant breakthrough that will provide the infrastructure solution for the Internet of Things–or a complete disaster waiting to happen. Take your pick.

After recovering from some teething trouble in its early days, IOTA has been gaining respect, forging relationships, and working on smart cities. But, beyond an announcement of a partnership with Jaguar Landrover, it hasn’t commanded all that much press. Until lately when the project suddenly became besieged by negative headlines.

Starting with a very public feud between an early IOTA founder threatening to sue the Foundation over embezzlement of his 25M tokens, followed by a vulnerability in the Trinity wallet on Feb 12 leading to $2.3mn hack–and the forced shut down of the Tangle. IOTA has seen better days.

With the switching off of its network for over two weeks now, IOTA seems to have lost its way. And its outage has already outlasted several celebrity marriages including those of Britney Spears, Pamela Anderson, and Carmen Electra.

IN A BIT OF A TANGLE

With its Tangle technology, IOTA aims to secure the Internet of Things and its applications. Yet the recent unfortunate events have shown that “Tangle” is a word better suited to the big fat mess the Foundation currently finds itself in.14 BTC & 30,000 Free Spins for every player, only in mBitcasino’s Crypto Love Affair! Play Now!

So far, it has responded in a three-part statement. However, the incident has angered many IOTA investors, not only those whose tokens were stolen. If the feud and the hack weren’t bad enough, many of IOTA’s pilot projects are now up in the air.

So, can the team make good on its promises and turn the Tangle back on? Can it rekindle trust (once again) in investors and continue to forge new partnerships? Or will it go the full 72 days to outlast the marriage of Kim Kardashian and Kris Humphries?

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IOTA Up 12% Despite 11 Days Offline

IOTA has seen its price surge by more than 12% in the past 30 days, despite its network being offline for nearly two weeks due to a hack. The price is a testament to the lack of any predictability in the crypto market.

IOTA Investors Unbothered?

IOTA, an ambitious project designed to facilitate transactions in the Internet of Things (IoT) ecosystem, has had a hard time maintaining a consistent uptime. Following a 15-hour outage in December last year, the network was turned off earlier this month to deal with the consequences of a massive wallet hack.

The IOTA Foundation turned off its transaction validator called Coordinator on Feb. 13 after a major vulnerability in its Trinity wallet was exposed. The vulnerability has reportedly cost the network between $300,000 and $1.2 million in IOTA.

While users have been unable to send or receive IOTA for almost two weeks due to the outage, it seems that the controversy hasn’t affected their trust in the network.

While the coin saw its price drop by around 20% since the outage, its current price represents only a 10% drop since the beginning of the month.

IOTA/USD price chart by CoinMarketCap
IOTA/USD by CoinMarketCap

No Rules in the Crypto Market

As CryptoBriefing reported last week, the majority of users holding IOTA said that they plan to hold onto their tokens when the network goes online on Mar. 4. In a poll conducted by Julian Hosp, the co-founder of Cake DeFi and I-Unlimited, only 32.5% of respondents said that they intended on selling their IOTA.

The coin’s unexpected performance goes to show that, when it comes to the crypto market, there seem to be no rules.

The coin has seen its price increase by 12.7% since Jan. 24, according to data from CoinMarketCap.

IOTA/USD month price chart by CoinMarketCap
IOTA/USD by CoinMarketCap

However, it’s worth noting that while users can trade the IOTA kept on exchanges, most coins remained locked on the network. It’s possible once the network goes live there will be a significant selloff.

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10 Days since IOTA Shut Down, Centralized Digital Assets and their Actions

Ten days ago IOTA reported that funds were stolen from ten of its highest-value users to counter the situation the project shut its network for further investigation. 

In the official release, they stated,

“Currently the Coordinator is halted until further notice to investigate reported issues with stolen funds. We ask you to keep the Trinity wallet closed for now until further notice.”

In a progress report, the IOTA group clarified that the issue came from a third-party integration in the desktop app of Trinity – their official wallet for MIOTA tokens. The vulnerability in the framework was exploited by the attacker who stole users’ seeds [digital key passwords] and accessed the wallets.

Pros and Cons of centralization

Pros: Every other day, users holding funds in millions lose their seeds keys, undergo phishing attacks and ever so often get their wallets hacked due to lack of security. Nevertheless, no question of a rollback or re-gaining the assets come in the picture. Except in 2019, when Binance was hacked for 40M USD and CZ thought he could rollback [yup, we still remember that]. However, no matter what rollback is not possible with Bitcoin. The primary reason being its decentralized network that runs with no central point of authority to make decisions. Which is why if you lose your key, you lose your coins. 

Funnily enough, centralized cryptocurrencies can actually rollback the chain and write over the ledger to gain lost coins, like Ethereum did when it split into ETC and ETH. 

Similarly, IOTA has published multiple steps for remediation plans to get things going. 

  1. Users need to install the latest updated version of the Trinity wallet.
  2. Users need to change their wallet passwords to new ones.
  3. Users need to transfer their assets to a safe seed using seed migration tools

Once all the precaution is taken users will be in a position to reclaim their stolen MIOTAs. This will happen through the IOTA team taking a global snapshot of the network which other users will have to validate. Following this, the project will take the help of a third-party to restore what’s lost and credit it back to the users.

Cons: Centralized digital assets are no different than centralized banks. If someone can keep you from using your assets irrespective of what has happened, your assets are managed by them even if its owned by you. 

From the past 10 days, the IOTA network has been shut. This limits MIOTA users from using their funds for any purpose. Especially for users that work with MIOTA tokens on a daily basis. One day it works normally and suddenly something goes wrong, to battle it the decision-makers of the project shut down the whole network. You’re stuck with your tokens, unable to convert, trade or use.

Speculations suggest this was also done in order to prevent MIOTA price crash since history repeats itself and dumps usually come in when a particular coin/token has been hacked or used for malpractices [although, this doesn’t show any correlation with Bitcoin anymore].

People have expressed how anxious the network shutdown of IOTA makes them feel

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