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Veritaseum Hack Proves Need for Tighter Security in ICO Market

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Blockchain startup Veritaseum has become the latest victim of an ICO hack. During its July 24 sale, the platform was compromised and lost about $8.4 million worth of cryptocurrency.

Veritaseum is a blockchain project that seeks to utilize the blockchain in order to create smart contracts that allow for direct peer-to-peer engagement within the capital markets space.

“Veritaseum utilizes smart contracts and blockchain technology to enable individuals and entities to transact directly with each other in a peer-to-peer fashion, with capital escrowed to the blockchain contingent upon smart contract-enforced, mutually agreed terms.”  

The company believes its Ethereum-based platform will give people more control over their investments as “it allows non-technical individuals and entities to quickly create, enter and manage smart contracts directly with others without an authoritative third party.”

During the crowdsale on July 23, the company was allowing users to buy VERI tokens for the financial platform is about to launch. However, an unknown hacker was able to steal some of the tokens that he or she then sold to other unsuspecting buyers who were participating in the sale.

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The total dollar amount lost during the theft came to over eight million. However, in an announcement Veritaseum CEO, Reggie Middleton, made light of the hack saying “at the end of the day, the amount stolen was miniscule (less than 0.07 percent) although the dollar amount was quite material.”

Though it is unclear how the hackers were able to acquire VERI tokens before the sale, Middleton further stated: “We were hacked, possibly by a group. The hack seemed to be very sophisticated, but there is at least one corporate partner that may have dropped the ball and be liable. We’ll let the lawyers sort that out, if it goes that far.”

This hack comes after CoinDash had its July 17 ICO compromised with hackers making away with 37,000 ETH which amounted to over $7 million. The hackers were able to do this by simply changing the address CoinDash had provided on its website to another address. This simple act allowed them to make away with the stolen funds.

In addition, in the past month hackers were able to take over $32 million in ETH from several wallets. The hackers were able to do this by exploiting a flaw in the Parity Ethereum wallet client that allowed theft from accounts with multi-sig wallets.

It is important to note that in all these attacks, the Ethereum blockchain was secure and unaffected. These attacks were made possible by external security lapses. This points to a clear need for greater security measures to be put in place in order to mitigate these thefts.

As the initial coin offering market grows, it is likely to attract more malicious entities with the aim of stealing funds. It is, therefore, in the interest of market players to enhance security measures in order to ensure steady growth in the sector.