Poloniex Claims All Customers Repaid Following March Bitcoin Hack

Pete Rizzo
Jul 2, 2014 at 15:29 UTC
NEWS

US digital currency exchange Poloniex has released a new update on the customer repayment plan it implemented following the loss of 12.3% of its total bitcoins in a March attack.

In a new press release, Poloniex claims 100% of the customers who experienced a financial loss have been reimbursed after a hacker or hackers reportedly exploited a vulnerability in the exchange's coding in order to steal the funds.

Speaking to CoinDesk, Poloniex owner Tristan D’Agosta indicated his belief that customers have been adequately and successfully compensated for the site issues, stating:

"97 BTC were taken and 97 BTC were paid back. Although the value of bitcoin fluctuated, it is not very different now from what it was in the beginning of March."

D'Agosta also stated that Poloniex has since learned from the experience, and that it has adopted additional security measures to reduce the threat of a similar attack, saying:

“Since the hack, we implemented continual automatic auditing of the entire exchange, bolstered the security of all servers, and redesigned the way commands are processed so that an exploit like the one used in March is impossible."

Poloniex says it repaid customers using what would have been its profits from running the exchange. Based in Montana, the digital currency company trades blackcoin, litecoin and vertcoin, among a number of additional alternative digital currencies.

Customer feedback

At press time, at least one customer had confirmed that he had been reimbursed by the company.

Poloniex user and CEO of Israel-based Uppbit.com Dor Konforty told CoinDesk that he has thus far been impressed with the company's transparency during the repayment process, saying:

"As a victim of various other bitcoin service meltdowns – BitFunder WeExchange, Cryptorush – I was innately skeptical about my funds being recovered, but quickly changed my attitude due to Tristan’s conductance. It was clear that he was taking responsibility for what had happened."

CoinDesk has reached out to additional customers, who have not yet responded to inquiries.

Altcoin boost

Though Poloniex suffered a breach of its bitcoin reserves, D'Agosta indicated that it was the success of an altcoin that helped the company escalate its repayment plans.

D'Agosta added:

"If any coin should be singled out for helping to provide the boost in volume that enabled us to pay back customers quickly, it is Monero (XMR). Being a supporter of innovative cryptocurrencies, we were the first major exchange to list CryptoNotes, and Monero is still traded primarily on Poloniex."

Though Poloniex was early to list another popular privacy-focused digital currency darkcoin, D'Agosta indicated that darkcoin's trading did not factor as much into customer repayment.

Repayment success

The news of Poloniex's repayment success follows May's headline that online black market website Silk Road 2.0 had reimbursed its users following a February hack.

Both events suggest that such customer repayment plans have seen success, even in the face of early criticisms from users, and that such initiatives could become a viable way for industry businesses to deal with similar setbacks in the future.

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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