This article first appeared in The Edge Malaysia Weekly on August 16, 2021 - August 22, 2021

Only in the obscure world of cryptocurrency can someone “steal” US$600 million (RM2.5 billion) worth of digital coins and return most of them within 48 hours. And to top it all, the aggrieved party rewards the hacker with a sum of US$500,000.

The hacker, dubbed “Mr White Hat” for supposedly being ethical about the hack, claimed that the theft from Poly Network was only done to help improve the security system of the exchange. Poly Network operates a decentralised finance platform that allows for the swapping of digital coins into other blockchains.

Poly Network operates on the Binance Smart Chain, Ethereum and Polygon blockchains. Users are able to swap digital coins between blockchains and the process is by going into “smart contracts” that specify the amount of coins to be released to counterparties.

This is not the first time a digital coin exchange has been hacked, although this would be the biggest heist in the cryptocurrency world. The other exchanges affected previously were Mt Gox and Coincheck. In those incidents, the coins were gone. This time around, they were returned.

Cryptocurrency cheerleaders label the hacker as being ethical. But sceptics feel that the reason for returning the coins is because they cannot be disposed of easily in the marketplace.

The Poly Network hack once again highlights how unsafe it is to count digital coins as an asset. The exchange where they are held can be hacked and the owners have limited recourse.

Even the authorities would not be able to do much because the world of cryptocurrency is not a fully regulated one.

There is some level of oversight to ensure that there are adequate disclosures to prevent cryptocurrency from being used as a conduit to launder money or legalise gains from unlawful activities. But nobody is going to nab the hacker because it’s a wild digital coin world.

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