NEW DELHI (CoinChapter.com) — Indian crypto exchange Bitbns accepted that it suffered a hack in Feb 2022, compromising $7.5 million of users’ funds. Its CEO Gaurav Dahake took to Twitter to confirm the hack, claiming that such incidents are common with crypto exchanges.

On Mar 1, independent crypto researcher ZachXBT tweeted that Bitbns suffered a hack on Feb 1, 2022, and chose not to reveal it to the public. The on-chain analyst shared screenshots of old Bitbns tweets in which the exchange claimed that the service blackout was due to “system maintenance.”

Dahake stated that the exchange had witnessed unusual activities before the attack, during which Bitbns servers experienced increased throughput. As a result, the team decided to take the exchange offline.

Further investigation revealed errors in the price of a few tokens (Dahake mentioned MATIC, AAVE, and BNB), specifically a difference in their buying and selling prices.

While Bitbns was shut down, hackers compromised the firm’s hot wallets, stealing nearly 2,434 ETH tokens. The majority of the withdrawals were from wallets 0x4960A and 0x24f36. Wallet 0x24f36 sent funds to another wallet, 0x48951, and withdrew the stolen tokens to Tornado Cash.

The hackers have been withdrawing varying amounts of ETH from the wallet repeatedly over the past 13 months. The latest transaction occurred on Mar 3, 2023.

Bitbns CEO- Whatever Doesn’t Kill You, Makes You Stronger

Bitbns CEO went on YouTube for an AMA session to answer user questions after ZachXBT outed the hack. Dahake claimed that the hack was not that big of a deal, stating that all the major crypto exchanges have had their funds compromised by hackers at least once since they started operating.

During the AMA, Dahake compared the Bitbns hack to attacks on crypto entities like Binance, Coinbase, Axie Infinity, etc., though several viewers said comparisons did not help. The Bitbns chief compared operating a crypto exchange with an activity like learning to drive.

“When you are learning to drive, you might have minor accidents. But, you keep learning from them, and keep improving. Same with crypto,”

Dahake said about the BitBNS hack.

Liquidity Troubles

Once Bitbns accepted that it was hacked in Feb 2022, several users questioned the exchange’s current health regarding liquidity and proof of reserves (PoR).

Though Dahake did not tackle questions about PoR directly, the BitBNS CEO claimed that the team is working on integrating Antani, a Bitfinex product. Antani helps demonstrate exchange-wide proof of reserves (PoR).

When asked why the exchange did not reveal information about the hack, Bitbns stated they approached law enforcement for help after detecting it.

Dahake told CoinChapter that law enforcement authorities advised them not to go public until the hack investigation was complete or reached a dead end.

Furthermore, the Bitbns chief stated that the team had identified the “KYC details” of an individual involved in the hack and had recovered some of the funds. However, he gave no details regarding how much funds the exchange could recover.

Bitbns Users Complain About INR Withdrawals

One of the most persistent complaints users shared during Dahake’s AMA was regarding their pending INR transactions. Fiat currency withdrawals on the exchange have almost five months of backlog.

During Dahake’s AMA, several users complained about the problems plaguing INR withdrawals. Dahake repeatedly mentioned how Bitbns was one of the few crypto exchanges still offering crypto withdrawals, while INR withdrawals are suffering due to banking issues.

Additionally, the Bitbns CEO shared that the exchange implemented P2P trading as a workaround and might introduce an instant fiat withdrawal option soon. However, investor confidence in the exchange might be hurt following the recent revelations, along with the other issues plaguing users.

A Twitter user shared that Bitbns “was one of the best exchanges I used,” but started acting “very weirdly” over the past year. The user stated that his life savings remained stuck on BitBNS. Another user contacted CoinChapter on Twitter, claiming he has INR 20,000 stuck on the platform.

The user shared multiple screenshots, stating that the exchange denied his withdrawal request multiple times citing different reasons. Other users have also complained about the lack of transparency around the exchange’s fund reserves.

Given the hits that the crypto market faced over the past year, such as the FTX fiasco, Terra collapse, and 3AC bankruptcy, investors have become sensitive when it comes to transparency.

NFT enthusiast aheli1108 believes the way Bitbns handled the hacking incident might not help its image. Though she refused to comment on whether hiding the incident was wise or not, the self-proclaimed “crypto fanatic” did state that “transparency is key in web3/crypto space.”

As someone who has been observing BitBNS for a while, I’d say their reputation has been pretty shaky since 2018. To be fair, they did try their best to find a workaround after RBI’s mandate in 2018.

Aheli1108 told CoinChapter.

Additionally, aheli1108 speculated that the BitBNS team might have advised Dahake not to reveal details of the hack.

The Crypto Hanuman, Zakhil Suresh, And Gaurav Dahake Triangle

Gaurav Dahake called on several crypto influencers to ask questions during his AMA. Dahake stated that he reached out to ZachXBT, too, asking the on-chain researcher to work with the exchange. Another crypto influencer that the Bitbns CEO mentioned was Crypto Hanuman, a pseudonymous crypto trader.

Crypto Hanuman has been a vocal proponent against Bitbns and its CEO, Gaurav Dahake, since 2018. In Aug 2022, the crypto influencer alleged that Gaurav Dahake might have been involved in stealing user funds from Koinex in 2018.

CoinChapter contacted Gaurav Dahake regarding the allegations, which he denied categorically, stating that “there are hundreds of random accusations he [Crypto Hanuman] has done.”

Dahake also said that Crypto Hanuman’s real name is Zakhil Suresh, that he runs a “competing product to exchanges called Bitsav,” and that Bitbns had restricted Suresh’s account.

What you are thinking is a whistle blower just is salty because he was earlier working at a competing exchange and now is building a competing product to exchanges [sic]

Dahake told CoinChapter

CoinChapter then contacted Zakhil Suresh, who denied being Crypto Hanuman. However, he did confirm that he was working on a project but claimed Bitsave is designed to work with exchanges, not compete with them.

Furthermore, Suresh stated he had some issues with withdrawing INR 200,000 ($2,447) from his Bitbns account last year. Otherwise, he has not interacted much with the exchange, claiming he contacted the BitBNS team to integrate the exchange’s onramp money service with his app.

I do not know why my name is being dragged into this right now exactly when my product is about to launch.

Zakhil Suresh told CoinChapter

CoinChapter contacted Koinex CEO Rahul Raj regarding the theft allegations against Gaurav Dahake. However, Raj either failed to respond or did not comment on the matter, considering he shares his alma mater with Dahake.

Crypto Hanuman — “BitBNS Is Shady”

Meanwhile, CoinChapter talked to Crypto Hanuman, who confirmed he is not Zakhil Suresh. The influencer stated that his name is K.Varma (CoinChapter is not revealing his full name). Varma told CoinChapter that he reached out as the confusion might harm Suresh’s upcoming product.

Varma stated he had been “exposing [sic]” Bitbns’s “shady practices” for a long time. Moreover, the crypto influencer promised to share his identity publicly if Zakhil Suresh’s name continues to get dragged into the controversy.

The post Bitbns Liquidity Troubles After $7.5M Hack Deepens Crypto Crisis Led by Terra, FTX Fiasco appeared first on CoinChapter.

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Filed under: Bitcoin - @ March 4, 2023 8:56 pm