IOTA Founder to Repay User Losses from Personal Stash

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IOTA Founder David Sønstebø has said that he will make whole any users who have lost out financially from the wallet hack that has kept the IOTA blockchain offline since February 12. There are some 46 known victims of the hack on the Windows version of the project’s Trinity wallet, with the total stolen thought to amount to some $2 million.

Blockchain Down for Almost a Month

IOTA has been engaging in a damage limitation exercise on the PR front since the news came almost a month ago that the blockchain had essentially been paused after users reported funds missing from their Trinity wallets. This led to the discovery of the theft of millions of MIOTA tokens.

Sønstebø told Cointelegraph that the team hoped to restart the blockchain tomorrow following a week of migrating seed keys from hacked and potentially hacked wallets to new ones, adding that he will use his personal holdings to reimburse those who have lost tokens:

Thus, I chose to use my personal holdings (which I haven’t touched in 2 years) to safeguard the Iota Foundation’s runway. […] It will cost around ~2 million USD.

MoonPay Integration Blamed

IOTA has blamed integration with MoonPay as the reason behind the theft, with an attacker exploiting a flaw in the system that was supposed to allow holders to buy more MIOTA tokens from inside the wallet.

IOTA has come in for criticism in the past regarding the security of its platform, with many in the space suggesting that this latest hack, the second in two years, represents their chickens coming home to roost.

There is also heavy criticism from crypto purists that the blockchain is partially centralized, although it is this centralization aspect that managed to save the funds of the rest of the wallet holders – a fully decentralized system would have been impossible to turn off, potentially leading to all wallets being emptied, leading once again to the debate on the merits of both sides of the argument.