Cryptsy Sued for Holding Nearly 5 Million USD of User Funds. newsbtc Cryptsy, amid various accusations, lawsuits, and complaints have finally unraveled the cause of its multi-million dollar loss.
According to its official blog post from an individual who demonstrated himself as the founder and operator of the exchange, the Cryptsy platform began to experience technical problems when the developer of Lucky7Coin allegedly placed an IRC backdoor into the code of the wallet, which acted as a trojan and control unit.
“it was found that the developer of Lucky7Coin had placed an IRC backdoor into the code of wallet, which allowed it to act as a sort of a Trojan, or command and control unit,” said the founder.
The Cryptsy team emphasized that this was a “critical event for Cryptsy,” but the team was able to handle it with the consistent profit from its operations and investment in various cryptocurrencies.
After a few months since this “event”, Cryptsy users constantly reported withdrawal issues with their accounts. Some users created forum threads to design tutorials in extracting their own user funds from the exchange. While paying substantially high transaction fees, users converted their Bitcoin or Litecoin into other alternative cyptocurrencies, transferred them to more reliable exchanges like Poloniex, then switched back to Bitcoin. Although the entire process took more than week and over US$100, an increasing number of users began to use this method to get a hold of their coins.
Disregarding the technical issues users have experienced, the founder or operator of Cryptsy went on ahead instead in criticizing Coinfire for publishing a misinterpreted article about the exchange. The Cryptsy team emphasized that this was the point in time when things began to crumble.
“It wasn’t until an article from Coinfire came out that contained many false accusations that things began to crumble. The […]