eBusiness Weekly
Jeffrey Gogo
Disruptions caused by recurrent security problems have started to take a toll on volumes at Golix, Zimbabwe’s first cryptocurrency exchange. Trading on Golix.com was this week thinner than normal after revelations the exchange had been hacked.
Volume fell 98 percent below the daily average for the month to March 14, according to data on the Golix website.
As of Wednesday morning, about 0,0271 Bitcoin had traded in 24 hours, compared to 1,37 Bitcoin exchanged each day, on the average, for the past month.
In dollar terms, that’s a crash in daily turnover to $379 from $19 200, at current prices.
It emerged this week that hackers had since late February progressively infiltrated the Harare-based digital currency trading platform, Golix spokesperson Nhlalwenhle Ngwenya told the Business Weekly.
About 23 retail investors’ accounts were affected, he says, but no money was stolen.
“In the three weeks leading up to the 12th of March 2018, Golix noticed that there had been unsolicited access on a limited number of user accounts,” Ngwenya said in emailed responses.
“During this period, a third party took advantage of email password vulnerabilities on twenty three (23) Golix accounts to facilitate transactions without the users’ consent.
“Affected users noticed some changes to their accounts such as the conversion of their crypto-currencies and the acquisition of additional crypto-currencies through already held US dollar balances,” he added.
Ngwenya did not indicate the amount of Bitcoin or money involved in the attack. He ignored repeated requests for clarity on this matter.
He also did not respond to requests on whether Golix had managed to identify the hackers or trace them at all.
Styx24 picks up the pieces
Questions have been asked about whether Golix was sufficiently prepared for any breach of security, given that the exchange has been dogged by such problems in the past.
Investors told the Business Weekly of Golix’s frequent crashes in recent weeks, particularly during the three weeks of the latest hacking, expressing concern on the safety of their investments that are kept on the exchange.
But this is not the first time that similar issues have hit the exchange.
Golix went offline the morning of January 21 for more than 14 hours in an unexpected shut-down that management described as a “technical glitch”.
Initial fears that the crash was a result of hacking turned out to be false, but that did not prevent investors’ confidence from taking a knock.
With a crisis of confidence on the one hand, and a bearish crypto market on the other, new digital exchange Styx24.com could emerge biggest winner from the troubles at Golix.
Styx24 may be 136 times smaller than Golix, as measured by user numbers, but the newcomer appears to be punching above its weight.
Three weeks since Styx24 started trading, volume has soared 500 percent to 1,2 Bitcoin or $15 000 in turnover each day, figures from the exchange show.
Only 0,2 Bitcoin traded when the Gweru-based exchange went online on February 22, 2018, as the number of traders rose to 300 from 200 a week ago, officials say.
But with the equivalent of 41,18 Bitcoin exchanging hands at Golix over the 30 days to March 14, Styx24 still has some catching up to do. That’s a monthly turnover of $575 000, on the average.
Styx24 founder and chief executive Tatenda Mabungu on March 7 told the Business Weekly how he intends to break Golix’s cryptocurrency trading monopoly in Zimbabwe by offering a service that is he claims to be more secure and efficient.
He accused Golix of “being hacked many times”, having “a lot of bugs and security vulnerabilities” and of hosting “a poorly developed website”.
Apparently, the chickens have come home to roost. This week the 31-year-old showed concern about the negative outcomes that repeat security intrusions at Golix could have on the entire local crypto market.
“I wish them (Golix) all the best,” Mabungu said in a conciliatory text message.
“Recurrent security issues are not good or healthy for the Zimbabwean crypto community.”
Improved security
Nhlalwenhle Ngwenya, the Golix spokesperson, resisted calling the latest breach on his exchange a hack.
“Contrary to information that has been miscommunicated in relation to this issue, the Golix exchange has not been hacked,” Ngwenya said, in an attempt to reassure nervy investors, in a Press statement.
He can call it whatever he wants. But any unauthorised access to a system is, basically, a hack. And that happened at Golix over three weeks.
Ngwenya also appeared to place culpability on users not doing enough to secure their accounts.
Though investors may now find comfort in that following the attack, Golix reinforced its security.
The exchange has activated the two factor authentication at log-in, a deficit for which it has come under routine criticism.
Until now, the two factor authentication, a water tight security feature prompting users to input a six number pin that changes every thirty seconds, was available only on withdrawals.
Now, the greatest risk from such a security setting is that attackers could hack into an account, fondle buy and sell orders to the effect of disadvantaging the legitimate account holder.
Although no theft of funds may eventually occur, it is bad enough to risk one losing their investments sold at a discount by some mischief-maker, known to the account holder or otherwise.
This is exactly what happened at Golix in the three weeks before March 12. Golix said it had carried out “an internal investigation to evaluate the full extent of the breach and to identify areas that needed to be addressed immediately.”
“From the time the issue was first identified, Golix has been working tirelessly to safeguard customers’ funds and to double down on existing security measures,” added Ngwenya.
He continued: “Efforts have centred on improving account security for both Golix and users’ email accounts, especially through an awareness of best practices for account security. Customers have also been urged to adopt unique passwords for their emails and for their Golix accounts.
“Golix is also urging its customers to adopt a strict approach to securing their information especially when they are sharing their details online.
“More importantly the exchange has also adopted additional measures that continue to prevent the unauthorised withdrawal of any form of currency from users’ accounts.”
