The hacker made off with a presumed $150,000 or more from 71 transactions. Experty and Bitcoin Suisse have sent out warnings to users not to send money to the wallet address in the email sent by the hacker.
Experty ICO Weaknesses and Threats
Experty is preparing a blockchain-based VoIP calling system, where users pay with cryptocurrencies instead of money. The ICO was supposed to help the company raise funds (in the form of the Ethereum cryptocurrency) to build this service. Interest was high as Inc.com ranked the Experty ICO as one of the top 10 ICOs to watch in 2018.
A hacker has tricked Experty ICO participants into sending Ethereum funds to the wrong wallet address. He was able to do this by sending emails with a fake pre-ICO sale announcement to Experty users who signed up for notifications. The second is also related to the settlement but is basically the legal simplification created by using a cryptocurrency to transfer funds between any two parties. EXY tokens paid for services during the call can be withdrawn at any time into an Ethereum wallet. The Ethereum wallet address in this email currently holds over $150,000 worth of funds, received from 71 transactions.
An ICO (Initial Coin Offering) is similar to a classic IPO (Initial Public Offering), but instead of stocks in a company, buyers get tokens in an online platform. Users can keep the tokens until the issuing company decides to repurchase them, or they can sell the tokens to other users for Ethereum.
The Experty ICO aims to bring the business of blockchain onto a decentralized platform. The project platform is designed for analysts, advisors, influencers, developers and consultants to compete in a single, decentralized ecosystem run on the EXY token. With this, the Experty ICO is out to improve the blockchain sector as a whole by creating an easier and more efficient means for users to access expert consultation and advice. The platform is primarily based on messaging, voice and video calls, with plans to integrate screen sharing and group calls later in 2019.
Experty initially said it would give 100 EXY tokens (worth around $120) to every person in their email database. In a statement issued on January 29, the company announced extra compensation for users who sent money to the scammer’s wallet. According to a screenshot posted by Chris Koerner on Twitter, the hacker appear to have used more than one Ethereum wallet address with the emails, so there is the possibility that users lost even more funds.
Experty.io is a Ethereum powered voice and video application which allows users to monetize their time, knowledge, and expertise on a global scale. The Ethereum blockchain allows for automatic payments from client to contractor based on the predetermined rate and the length of the conversation. Experts on any subject can share a link to their Experty profile on any platform they see fit, including but not limited to, social media, websites, and emails. Furthermore, blockchain protects users from fraud and allows them to encrypt their wallets for security measures.
This sounds great for early contributors because demand for EXY will go through the roof as the app gets more and more attention. The problem though is Experty wants to make using their application as simple as possible, and there’s nothing simple about noobs going onto exchanges to buy crypto. Therefore Experty has decided to allow users to convert their credit cards, BTC, ETH, and other cryptos into EXY right on the Experty app.
Experty ICO Overview
- An ICO is similar to an Initial Public Offering (IPO), but instead of stocks, the buyer receive tokens in an online platform.
- On January 26 and 27, a hacker tricked Experty ICO (Initial Coin Offering) participants into sending Ethereum funds to the wrong wallet address.
Moreover, a statement from Experty and Bitcoin Suisse said that the hacker got hold of the email list by compromising the computer of one of the people who carried out Experty’s Proof-of-Care review. On January 26 and January 27, Experty users who signed up for notifications for the Experty ICO started receiving emails with a pre-ICO sale announcement of Experty (EXY) tokens. Users were asked to send money to a Ethereum wallet if they wanted to buy EXY tokens and be part of the ICO.
This choice and a few others, however, also raise a problem – the Experty team clearly wants to involve regular users who are not part of the crypto-community. But doing this while maintaining obligatory payments in EXY may make it more complicated for users unfamiliar with or unwilling to utilize crypto.
To reiterate what was said during that Q&A, Experty wants to appeal to non-crypto users too, so they need a way to allow for payment other than EXY. They planned to just convert credit cards, BTC, and ETH on their site to EXY, but then found out from lawyers that may make them a security, which they really don’t want. So now they are thinking about allowing ETH payments while finding other ways to bring value to the EXY tokens. For each new decentralized app concept, there must be a tangible improvement that tokenization offers to the non-tokenized business model. When it comes to the Experty ICO, we don’t see any significant improvements through tokenization and therefore, little incentive for mass adoption.
This way, the experts would still only be paid in EXY, which again sounds great. However, I had a lot more questions, so I went onto their telegram channel and had a delightful little Q&A with Experty co-founder Tom Dyl. Monetization of knowledge seems a fairly simple and natural idea, with a broad variety of application fields. It’s good to see the project is undertaken by a fairly big team, with significant experience in development. We are particularly fond of the choice to allow Experty profile links to be placed in regular social networks, as this may benefit the project’s promotion by utilizing existing communities.
I can tell this is not a money grab, as they are truly trying to be the Uber of the consulting industry. They do face several challenges, the most important from my view being the token.
The email users received was not sent by the Experty team, but by a hacker. A copy of the email is available below, courtesy of security researcher Indrajeet Bhuyan. Unidentified parties who gained access to an Experty contact list sent out an email over the weekend containing a pre-sale announcement requesting ETH payments for a wallet address unaffiliated with the ICO. The purpose of the token is where this project runs into some issues. According to the whitepaper, the EXY token will be the only form of payment from advice seekers to experts.
On January 26 and 27, a hacker tricked Experty ICO (Initial Coin Offering) participants into sending Ethereum funds to the wrong wallet address. The hacker sent emails with a false pre-ICO sale announcement of Experty tokens to users who signed up for notifications. An ICO is similar to an Initial Public Offering (IPO), but instead of stocks, the buyer receive tokens in an online platform.
Both Experty and Bitcoin Suisse are now warning users not to send money to this wallet. The Ethereum wallet address in this email is not associated with the Experty team, who previously announced they would be handling sales of Experty tokens only via the Bitcoin Suisse service. The Experty team is large, solid, and has shown their abilities to get stuff done in the past.
EXY tokens will be the only currency used on the Experty platform in order for knowledge seekers to have phone calls or video calls with the knowledge providers. The Experty website will have a soft wallet, and a way for users to buy EXY tokens directly using fiat or cryptocurrencies. Experty.io is the first Ethereum powered voice and video application which allows users to monetize their time, knowledge, and expertise on a global scale. The email was a fake because the actual Experty ICO was scheduled for January 31, and not this week.
Several companies are already using blockchain technology to transact using cryptocurrencies. In some occasions, businesses lose over 5% of their value when making online payments. Through the use of blockchain technology, cryptocurrencies like bitcoin and ethereum are increasingly filling this gap. Currently, digital currencies are used in more than 40 national currencies, about a quarter of all currencies recognized by the United Nations as legal tender.