Unocoin, one of India’s oldest cryptocurrency exchanges, suspended all services and began rebuilding its entire server system after a security breach, leaving customers without access while it investigates the extent of the compromise.
“Given the circumstances and in the interest of protecting customer assets and data, we took the precautionary decision to suspend all Unocoin services immediately,” the exchange said in a security update on Thursday November 12.
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The exchange had first detected unauthorised activity on Friday November 6 after which it asked BitGo and Fireblocks, the service providers that hold the crypto balances it needs for daily transactions, to freeze its enterprise accounts. Both confirmed the freezes, and Unocoin said no funds had been lost at that point.
The measures did not stop the intrusion as Unocoin detected further unauthorised activity on Monday November 9, despite strengthening vulnerabilities in its systems, following which it then suspended all its services. Its investigation established that its infrastructure had been compromised, but the company had not yet determined how far the breach reached or what information was exposed.
The exchange decided to rebuild its servers from scratch and to add stronger security controls rather than restore the old environment, according to the update. The exercise, it estimated, would take four to five working days. It further said that it would run security checks before resuming operations.
On Thursday (November 12), Unocoin identified outgoing transactions from one of the Ethereum addresses in its BitGo wallets, which it used to fund ERC-20 tokens. It escalated the finding to BitGo, which has in turn began an investigation and said it was treating the matter as a priority.
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The exchange said it could not yet establish the full extent of those transactions and its BitGo accounts remained frozen, so it could not log in. BitGo’s wallet design also used change addresses, which receive leftover funds from a transfer, so Unocoin could not fully trace the activity on the blockchain.
Unocoin said more than 90% of customer cryptocurrency funds were held in cold storage, meaning offline, and that it did not keep cryptocurrency on its own servers. It said it was working with BitGo and Fireblocks to establish the full status of its holdings.