Kent rival to Bitcoin cryptocurrency Electroneum forced to abandon launch after users' accounts 'hacked'

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A start-up which aimed to launch a rival to Bitcoin has suffered a barrage of criticism from frustrated users after allegations it had been “hacked”.

Electroneum, based in Maidstone, had planned to begin operating on November 1 with an app designed to appeal to people who play games on their mobile phones.

It had raised millions of dollars ahead of the launch in a so-called initial coin offering or ICO, an unregulated method of raising funds for new cryptocurrency ventures.

Electroneum was forced to abandon its launch after hundreds of user accounts were hacked
Electroneum was forced to abandon its launch after hundreds of user accounts were hacked

Yet its ambitions were immediately thwarted when hundreds of its users’ accounts were hacked within a day of its launch.

It forced the company to suspend its app and appoint a security agency that works for the US Department of Defense to audit its systems.

It left users unable to access their ETN, the electronic coins issued by the currency.

A message on the company’s website said: “The Electroneum blockchain is LIVE! However for security reasons and to protect your ETN we have engaged one of the worlds [sic] top security firms to test our system prior to launch.”

The company’s chief executive is entrepreneur Richard Ells, 47, who also founded Maidstone-based digital agency SiteWizard in 1996.

In a blog post on the company’s website, he denied Electroneum had been hacked and said, instead, it was the fault of users whose email accounts had suffered a cyber attack or signed up “using an email and password combination that had been hacked from elsewhere”.

Bitcoin. Picture: BTC Keychain
Bitcoin. Picture: BTC Keychain

He aims to relaunch the app by the end of next week.

He said: “We shut down our system before any transfers took place to ensure that we do everything in our power to ensure the safety and security of our users’ Electroneum coins.

“We realized the huge amount of effort that was being put into attacking our system – so we stayed offline to add a huge amount of additional security and then engaged HackerOne, who work for the US Department of Defence, Uber, Spotify etc.

“So far, HackerOne have NOT successfully penetrated our system security. Obviously we will be very pleased if they don’t manage to gain any access during the challenge, but if they do, they will work with us to ensure any vulnerability found is removed.

“We’ve had some people worry that we have run off with their money – I can assure you that everything is OK, we are working hard to ensure the new launch is a great success.”

Electroneum chief executive Richard Ells
Electroneum chief executive Richard Ells

Many who had downloaded the Electroneum app were quick to post their disappointment about their experience online in the Google Play Store.

John Mullins said: “Those who say the developers are doing their best are full of it. Overall, I won’t judge electroneum [sic], but there have been about 10 times in the last few weeks electroneum have dropped the ball.

“The app isn’t restricted or limited. It just wasn’t ready.”

Felix Madrid said: “The fact that they couldn’t deliver is fine. Sometimes deadlines can’t be reached with the amount of resources at hand. That’s understandable.

"What isn’t cool is that with [sic] all these other reviews speaking about issues ETN has not gone out of their way to reply to anybody on these comments or answer any questions AT ALL, that’s embarrassing as a business and shows that you don’t know the direction in which you [sic] company is headed.”

However Pankajpallab Mahanta said: “The developers are working at their best. This is going to be great soon. Already mining with desktop app, quite interesting the mining experience that I have with electroneum. Users getting panic [sic] due to the delay in the online wallet creation, I would like to ask them not to get frustrated as this crypto world is not a get rich quick scheme. Patience is the key factor here.”

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