Incident Overview
BitConnect was a Ponzi Scheme that managed to raise approx. $2 billion dollars from investors before it collapsed.
BitConnect is a crypto lending platform, which claimed it used a trading bot for earning interest.
In fact, BitConnect was suspected of being a Ponzi scheme because of its multilevel marketing structure and impossibly high payouts (1% daily compounded interest). BitConnect interest fluctuated greatly with the volatility of Bitcoin, which its value was tied to.
The BitConnect Coin was among the world's top 20 most successful cryptocurrency tokens until its price collapsed after traders began losing confidence. BCC rose from a post ICO price of $0.17 to an all-time high of US$463 in December 2017; it declined to US$0.40 as of March 11, 2019. BitConnect released outstanding loans at a rate of US$363.62 to the BitConnect Wallet in form of BCC. However, soon after that news the internal exchange price and liquidity collapsed resulting in a nearly complete loss of value. Prosecutors managed to seize crypto assets worth $57 million from Arcaro, BitConnect's biggest partner in North America.
Incident Report
Protocol Information
What the Attacker Needed to Succeed
Understanding the prerequisites for this type of attack helps auditors identify protocols that are most at risk and helps developers build better defenses.
What Auditors Should Check
If you're auditing a protocol with similar architecture to BitConnect, these are the critical security checks that could have prevented this incident (January 2018).
- Verify all logic paths related to Rugpull are guarded by proper access controls and input validation
- Review privileged functions (owner, admin, governance) for potential abuse vectors - centralization risks should be documented and bounded with timelocks or multi-sigs
Master these auditing techniques with hands-on labs and real exploit scenarios in the Smart Contract Hacking course.
Free TrialFunds Recovery
Recovered
$56.0M
Net Loss
1944000000
Sources & References
-
01
Source 1 https://www.bitconnect.co/
- 02
Learn to Prevent the Next BitConnect
The BitConnect hack is one of many attacks that skilled auditors are trained to detect before deployment. Master real exploit patterns and defense techniques with hands-on Web3 security training.