Hackers Steal $1.65 Million in NXT from BTER Exchange

UPDATE (15th August 17:20 BST): According to reports from the NXT community and BTER, a rollback is no longer being actively considered. BTER announced on Twitter that it would seek to retrieve the stolen funds through other means.

The company said:

We have decided not to rollback but get the stolen funds back from the hacker since we have got lots of information of him.

— Bter.com Exchange (@btercom) August 15, 2014

Update (15th August 22:15 BST): Updated with feedback from NXTOrganization.

BTER is reporting that 50m NXT, or roughly $1.65m at press time, has been stolen from its exchange following an attack on one of its hosting servers.

A developer representing the China-based digital currency exchange platform confirmed the news on the community information website NXT Forum, suggesting that the BTER team was considering urging the NXT community to roll back the NXT block chain to recover the lost funds.

In a post to the community, developer ‘freeworm’ revealed the gravity of the situation for both the exchange and the NXT community, saying:

“It’s totally our fault and we are trying our best to cover all the loss. However, 50m nxt is huge for us, we cannot afford it at the moment.”

Freeworm continued his post by providing the address containing the stolen 51,670,000 NXT, and detailing how it would seek to enlist the help of the NXT community in its effort to recover its funds.

The BTER representative suggested that the exchange is exploring all options, including contacting the NXT development team in an effort to rollback the block chain, thereby restoring the ledger to its state before the theft occurred.

However, NXTOrganization confirmed that a signifcant majority of forgers opposed the plan when it was proposed as part of a client update. 

“Most NXT users report only seeing a few 1.2.5b nodes. This would suggest that most of the community decided to go against the roll back even under the extreme pressure of such a large theft,” a spokesperson said.

BTER also revealed the news on Twitter:

Someone hacked Bter’s NXT central account and stole 50m NXT. We are working with the dev for a plan. We will keep you updated.

— Bter.com Exchange (@btercom) August 15, 2014

Latest block chain rollback

The block chain rollback proposal, while still only in its early stages, would follow vericoin’s decision to reset its internal ledger in July. That decision occurred after 8m VRC were lost in an attack on digital currency exchange MintPal.

While successfully avoiding the theft, the decision also sparked controversy within the altcoin community, with litecoin creator Charlie Lee speaking out against the decision and reassuring his community and its investors that it would not seek a similar solution in the event of large theft.

NXT was initially listed on BTER in January amid excitement about the then-new community. The second-generation cryptocurrency uses a version of Proof of Stake (PoS) for its algorithm, awarding the NXT collected from transaction fees in the last block to forgers for continuing to hold NXT.

Notably, vericoin cited its own PoS mining system as a key reason for its rollback. By not restoring the block chain to its previous state, many argued, the thief may have been rewarded for continuing to hold the confiscated funds.

Community reaction

At press time, many NXT Forum members were supportive of the idea of a rollback, though at least one member suggested that time was of the essence should the community look to pursue the fix.

Forum member ‘Come-from-Beyond’ suggested that the decision to revert NXT’s block chain would need to take place before 720 new blocks had been successfully processed by the community.

Other NXT exchanges also responded to news of the hack, with Poloniex freezing its NXT/BTC market.

CoinDesk will continue to monitor this developing story.

Image via NXT