eBusiness Weekly
Jeffrey Gogo
Cryptocurrency exchange Golix crashed this week, as panicky investors feared the worst on speculation the platform may have been attacked by hackers, making off with 12 Bitcoins, or the equivalent of over $200 000.
Golix went offline the morning of January 21 for more than 14 hours in an unexpected shutdown that management described as a “technical glitch”.
“. . . Our website faced a technical glitch which resulted in it automatically shutting down,” Golix said in a statement 24 hours later.
“The website was restored and customers are able to trade as per usual.”
After the crash, the exchange said it had reversed “all pending orders and transactions for security reasons”.
Golix tried to assure investors that their funds were safe.
In an earlier update, it had posted on its website how “we are fixing a technical issue”, sharing phone numbers that those investors freaking out, needing “to talk to someone at Golix urgently” could do so.
But only if it were “really urgent”, otherwise “we urge you not to call and give them (engineers) time to do their work.”
Golix has in the past gone offline, as do others elsewhere, but with a 14-hour downtime, the latest crash seems by far its biggest since launch in 2015.
It is little surprise that in an industry fraught with hacks and issues of stolen funds, retail investors are almost always in a state of perpetual fear, edginess — and exchanges all the more desperate to calm nerves in the event of what in another world would be a temporary ordinary fault.
In 2014, global exchange Mt Gox went under after a hack, taking with it hundreds of thousands of dollars of investors’ money.
And only a week ago, Bitconnect, long thought a pyramid scheme, shut down citing “bad press” and malicious attacks on its platform.
The closure costs investors dearly after Bitconnect’s token known as the BCC crashed spectacularly within hours of the exchange shutting down, plummeting to $20 from $200.
So, the rumour-mill went into overdrive — Golix had been hacked, the hackers made-off with 12 Bitcoins equivalent.
The news circulated on Zimbabwe’s small crypto-community on WhatsApp and Facebook, how a hacker (s) had infiltrated the exchange, mopping Bitcoin from the wallets of those that keep their funds there.
The hacker is said to have placed an incredibly wild bid that matched every Bitcoin sell offer. Golix’s system, which automatically credits the seller’s account the US dollar equivalent in the event of such a match, suddenly found itself with millions of dollars of investor funds it couldn’t honour, it is said.
Fretful, one investor only identified as Tich told a cryptocurrency WhatsApp group that “this is not good . . . this seriously erodes people’s confidence. We do agree that sometimes technical faults are unavoidable but in the event that something like that occurs try by all means to reduce downtime.”
Others weren’t as accommodating to Tich and those of his ilk, wasting no time to remind of the risks associated with cryptocurrencies.
“It’s a gamble. There are many risks. Investors in cryptos know that,” chanted one Dee.
And yet another, calling himself CryptoDanz, in a separate interview praised Golix for its efficiency and transparency.
“My experience with them (Golix) has been good because each time I face a problem they attend to it. Or explain the reasons. There are some international platforms that will ignore you,” he said.
Anonymity is a big deal in virtual currencies so actual names are often kept secret.
Golix co-founder Verengai Mabika told the Business Weekly that the rumour of a hack lacked substance.
“It seems whenever we have a technical glitch people speculate a hack,” said Mabika, by text message.
“It has happened countless times. We ordinarily alert our customers on our official Facebook and Twitter accounts of any technical issues and delays in the Bitcoin system. We are no longer concerned and worried with those. We try as much to educate our clients on all things happening either internally or externally in blochchain system.”
Golix promised to work “around the clock to prevent similar (crash) occurrences in the future”.
The exchange spoke of how the record downtime had jerked it into action to speed up the introduction of what it calls Dedicated Account Managers.
“These are agents that will be able to assist clients in operating their account with us, trading on the client’s behalf and performing transactions as per their direction,” it said.
The system of Dedicated Account Manegers remains oblique in its current format. We will be keen to see how it functions and how, in the event of another blackout, that will help minimise downtime by facilitating trades.
And, for the avoidance of doubt, should a hack occur on Golix, investors ought prepare themselves to walk away empty-handed.
Regulatory authorities won’t be there to bail you out either.
The Golix chief executive Tawanda Kembo makes no promise of a refund except that “people invest responsibly”.
