Bittrex Exchange Removes Bitcoin Gold From Their Exchange

Among cryptocurrency startup companies, the risk of theft, extortion, or major attack is very significant. The cryptocurrency community has always been especially susceptible to crime, because of the prevalence of technology-minded hackers in the markets, as well as the anonymous nature of cryptocurrencies in general.

For these reasons, startup projects looking to capitalize on a recent spike in public interest in cryptocurrencies are required to be increasingly careful when it comes to their security. If they fail to secure their own servers, the repercussions can be severe.

The executives behind Bitcoin spinoff Bitcoin Gold are learning this very lesson at the time of writing. Following a major hack that lost over USD $20 million in Bitcoin Gold funds from users in the past year, several members of the cryptocurrency community have come forward to question the security measures that have been taken by Bitcoin Gold’s developers.

In particular, several exchanges affected by the heists have requested fair compensation for the loss of funds resultant from faulty mechanisms which they blame for the major thefts that plagued the currency and its exchanges in the past few months.

In total, the cryptocurrency exchange Bittrex lost around 12,300 Bitcoin Gold, which has a monetary value of just over $260,000. In response, the exchange had requested that the developers of the Bitcoin Gold cryptocurrency pay a sum of $265,000 (12,000 BTG) as compensation for what they referred to as a fault in the Bitcoin Gold chain that allowed the heist to occur.

In response to the controversy, Bitcoin Gold’s team released a statement on their website. The writer highlighted that they did not believe that the security policy on Bittrex was not good enough to mitigate the risks associated with cryptocurrency trade. As a result, the team is convinced that the exchange—not the cryptocurrency and its chain—is responsible for the loss of profits.

Bittrex had issued an ultimatum to the team behind Bitcoin Gold. If they were noncompliant in paying the compensation of around $265,000, they would have their coin delisted from the major exchange. But according to the team, the payment will not be made, and the coin will be willingly removed from the exchange and its listing section.

For the Bitcoin Gold team, it seems that this decision was a strategic one. If they were to openly admit wrongdoing and pay what is effectively a legal ransom, they would have set a precedent that their technology was unsecure and that companies who had lost money using the chain can also request to be paid for their losses.

Instead, the company chose to kick the blame down the road, charging Bittrex itself for having lax security measures that allowed the funds to be stolen by the now unknown hackers.

For Bitcoin Gold, this is not the first notable security incident to be widely publicized. In 2017, there was a theft of around USD $3.3 million of Bitcoin Gold when social engineers managed to trick unknowing users into putting their funds into a false wallet.

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