Delhi-based crypto exchange report theft of over Rs. 200 mn in Bitcoin

• Coinsecure, a cryptocurrency exchange with over 200,000 users, claims 438 bitcoins have been siphoned off.
• A case has been registered under the IPC and Section 66 of the IT Act.
• The private keys, which are never supposed to be connected to an online system, were not only online, but were there for over 12 hours.

In what is perhaps India’s largest cryptocurrency theft, Coinsecure, a cryptocurrency exchange with over 200,000 users has lodged an FIR with the cyber cell of the Delhi police. The company claims that nearly 438 bitcoins have been siphoned off by Amitabh Saxena, its Chief Scientific Officer (CSO) - as declared on the Coinsecure’s website.

On Monday, the company’s senior security officer unearthed the theft when he found that all the bitcoins that were stored offline had disappeared. Apparently, the private keys (passwords) that are stored offline had been leaked online. The company’s efforts to trace the hackers was unsuccessful, since all the data logs of the affected wallets had been erased. A case has been registered under the IPC and Section 66 of the IT Act.

Since the theft, the company’s website has been shut and the following message been posted: “We regret to inform you that our bitcoin funds have been exposed and seem to have been siphoned out to an address that is outside our control. Our system itself has never been compromised or hacked, and the current issue points towards losses caused by an exercise to extract bitcoins to distribute to our customers.”

Coinsecure’s founder and CEO Mohit Kalra told the Times of India that he suspects someone from within the company is responsible. He said, “Private keys should have never been exported online. It looks like a crime committed intentionally. We have shared our suspicions with the Cyber Cell, and contacted specialists to find out the source of the hack and trace the bitcoins.” He also added that his company would be willing to compensate its customers if the money is not traced.

The police have seized the company’s servers and found that the private keys, which are never supposed to be connected to an online system, were not only online, but were there for over 12 hours.

The Reserve Bank of India has been wary of this form of unregulated currency trading. In fact, on April 6th, it banned regulated institutions from dealing with crypto exchanges. The move will be effective in just under three months now. It effectively makes it impossible for users to transfer money from their bank accounts to crypto exchanges and virtually bans the use of crypto currencies in the country.