Shutterstock / Wit Olszewski
On Monday, CoinDash held its first Initial Coin Offering (ICO) and things went wrong in a hurry. Yesterday, I wrote about how the co-founder of Ethereum claims that ICO’s are going to cause the Ethereum market to implode. He went so far as to call Ethereum a ‘ticking time bomb‘ because of what these ICO’s are doing to the existing blockchains.
So what happened? 13 minutes after the CoinDash ICO began, hackers breached their system and changed the address people would send new coin investments to and redirected it to a fraudulent address. In a short time, the hackers had stolen $7 million from investors who thought they were purchasing new CoinDash coins.
In the 13 minutes before hackers breached the CoinDash system and redirected investments, CoinDash did manage to raise $6.4 million in funding. So it wasn’t a complete loss for them financially. However, in terms of trust from the public, it seems like CoinDash is fighting a PR battle because some are suggesting that this was an ‘inside job’.
Just before the CoinDash ICO on Monday, this Reddit thread popped up with users alleging the CoinDash CEO is a ‘known scammer‘. Minutes later, the system was breached and millions of dollars were stolen:
There are also multiple tweets suggesting this was possibly an inside job:
Pretty basic stuff. The eth address was left unprotected. Makes me wonder if it was an inside job. #coindash #ico
— ⚡Crypto_Krill⚡ (@Crypto_Krill) July 17, 2017
Coindash hack smells like an inside job: https://t.co/rgIPrRl3Op $CDT $ETH
— drokzid (@drokzid) July 17, 2017
According to Fortune, CoinDash will honor the lost investments and pay out coins to the people who sent money to the hackers. That’s a big hit for CoinDash, and according to Jen Wieczner at Fortune it’s one that is likely to place a dark cloud over the hot trend of ICO’s.