Large scale thefts usually involve an exchange or a bug in a smart contract. While individual hacks are common, they don’t tend to make news because, by their nature, they only affect one person.
But one alleged hack of an individual is affecting an entire ICO, its participants and it has shed some light on how ICOs are handled.
Shopin ran its ICO a few weeks ago and things seemed to be progressing as you would expect. However, earlier this month they announced[1] that the syndicate they sent a significant portion of the ICO funds to, had been hacked.
Which means that all the customers who were a part of that syndicate have potentially lost the funds they have paid for.
We should back up, because the idea of a syndicate might be new to many of our readers.
ICOs are very popular in Japan at the moment. And the syndicate model, while far from exclusive to Japan, is a popular method to invest there. A bunch of people join together in a group and pool their money together. That money is then used to invest in ICOs in bulk, getting a better price for their trouble and sometimes are able to enter the ICO before the general public.
Ideally, this is done with a smart contract. Participants put their bitcoin or ether into a smart contract and when the ICO ends, everyone gets the correct amount of the ICO token back.
But oftentimes, smart contracts aren’t used and this seems to be the case here. Instead, the syndicate’s funds were controlled by one person and that person was supposed to distribute the Shopin coin to the syndicate’s individual members. That didn’t happen because apparently, the syndicate’s representative was hacked before she could distribute the funds.
The
