Two men have been indicted in California for allegedly hacking “decentralized” (peer-to-peer) crypto trading platform EtherDelta.
The indictment states that Anthony Nashatka (AKA “Psycho”), who resides in New York, and co-defendant Elliot Gunton (AKA “Planet”), who lives in the UK, have not yet been arrested.
The two are accused of conspiring to hack Chicago-based EtherDelta in late December 2017, when cryptocurrencies were trading at all-time high prices.
The accused hackers allegedly used “social engineering” (victim profiling using publicly available information) and phishing attacks (deceptive, often malware-loaded) emails) to access and control cellphones associated with EtherDelta as well as the exchange’s domain-name system (DNS).
“Resetting the DNS settings for email and for website infrastructure and website security,” and other compounding misuses of information allegedly allowed the accused, “to gain access to the cryptocurrency addresses and private key(s) of hundreds of victims of the EtherDelta exchange platform…and transfer without authority cryptocurrencies owned by the victims.”
The full extent of financial damage is not stated in the indictment. Given the frequently anonymous use of cryptocurrencies, the total damage may never be known.
Still, the co-defendants allegedly commandeered at least $800 000 USD in crypto from one victim.
The indictment seeks the civil forfeiture of any criminal proceeds.
EtherDelta claims to be, “a decentralized trading platform that lets you trade Ether and Ethereum-based tokens directly with other users. You are responsible for your own account, funds, and private keys. … EtherDelta makes no guarantee about the tokens that you trade using EtherDelta.”
Crypto aficionados praise the notion of “decentralization,” meaning “controlled by no single individual or entity.”
Critics note that poking holes in this notion comes easily when it comes to all third-party service providers in crypto (such creators of as wallets and exchanges), who must necessarily have a founding team and, at least initially, a centralized headquarters.
EtherDelta founder Zach Coburn appears to have sold the exchange just before the alleged hack took place.
According to previous reporting at Crowdfund Insider, “On December 16, 2017, Coburn sold his crypto exchange to foreign buyers and has not been associated with the exchange since.”
Late last year, Coburn and EtherDelta became the subject of the US Securities and Exchange Commission’s (SEC’s) first enforcement action against a crypto exchange.