UpBit $50 Million Hack Throws up Conspiracy Theories

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Conspiracy theories are never too far away in crypto, and the news that Upbit has been hacked for close to $50 million in ETH has loosed another few into the wild. Inside jobs and tax avoidance are two of the alternative theories doing the rounds following the mass looting of Upbit’s coffers, and shows that there is still as much skullduggery in the space as ever there was.

Upbit’s ETH Diverted

News of the Upbit hack emerged yesterday when 342,000 ETH was sent to an unknown wallet during a mass transfer of funds on the exchange, which immediately led to accusations that it was something more than a run of the mill hack from external forces. The exchange, which has seen staff arrested over wash trading and has been specifically targeted by North Korean hackers in the past year, announced that the ETH was sent to an anonymous wallet address from their hot wallet, but added that no investor funds were lost and that the funds will be replaced. In bad news for those with tokens on the exchange, deposits and withdrawals have been suspended for two weeks.

Inside Job?

The first suggestions that something was amiss came from crypto journalist Joseph Young, who suggested that the timing of the hack was suspect, and suggested inside knowledge was at play:

If Young’s theory is correct, then an individual (or more likely individuals) would simply need to have inserted their own Ethereum address at the last minute during the transfer process in order to divert the funds. If this is the case, then it’s incredible that no other safeguards were in place at the time, such as a test transfer before the full one.

Cheating the Tax Man

Another theory put out by Jeff Paik, co-founder and CEO of Finector, was that the hack was orchestrated to avoid taxes:

Proving that the funds were lost could allow Upbit to write their $50 million loss off against their tax bill, although they would have to be pretty sure of their ground if this was the case. The theory is the same argument posited by ICO shiller Ian Balina when he claimed to have lost some $2 million worth of cryptocurrency after a hack on his wallet in 2018. Whatever the reasons behind it, users will be relieved that their funds were not at risk and that Upbit has acted quickly in resolving the problem.