JAN 13, 2024
Telcoin makes users whole in exploit recovery
Singapore-regulated Telcoin, a developer of financial applications for mobile users, has successfully restored user balances following an exploit that saw approximately $1.2 million worth of funds transferred from affected accounts.
Unauthorized withdrawal of assets
The incident, which occurred in late December, was attributed to an error in the interaction between Telcoin’s digital wallet and a proxy contract on Polygon. In a blog post which was published on Wednesday, the company shared a full post-mortem analysis report which it commissioned Hong Kong-based blockchain security firm BlockSec to carry out, relative to the exploit.
The fault in the proxy contract’s implementation caused a technical conflict that allowed for the unauthorized withdrawal of assets. Fortunately, no admin keys were compromised, ensuring that the broader Telcoin ecosystem remained unaffected.
In response to the security breach, Telcoin took action by immediately freezing the use of its application as a precautionary measure. The team initiated an investigation and committed to releasing updates promptly to address the issue and restore normalcy. The identified address associated with the exploit was 0x35d2775e5f95596509951b140d68fc5b9185ff98.
TEL token freefall
Despite the initial market turbulence, with the price of the Telcoin (TEL) token plummeting, the cryptocurrency has demonstrated resilience. On Dec. 25, TEL fell from a peak price of $0.00235146 to $0.00122535, representing a 48% decrease. At the time of writing, the price has slightly rebounded, trading at $0.001335. Nevertheless, it’s still down 40% over the course of the past month’s trading.
In a social media direct message to CoinDesk recently, Telcoin’s founder and CEO, Paul Neuner, expressed pride in how his team responded to the issue, stating:
“Making the decision to preemptively restore affected user wallets from our company treasury was a no-brainer, and I’m proud of the team for making that happen in record time.”
Telcoin’s regulatory standing played a crucial role in instilling confidence during this challenging time. Although headquartered in Tokyo, the company is regulated in Singapore as a Major Payment Institution (MPI) by the Monetary Authority of Singapore (MAS).
The firm is also registered and regulated in other global markets, including Canada and Australia. Telcoin maintains offices in Singapore, Tokyo, Dubai and Los Angeles. The company had been active in trying to shape regulation in the United States in 2023, with company executives having made repeated visits to Washington D.C. to meet with Financial Services Committee members and staffers on Capitol Hill.
In April of last year, the company extended its service offering to the European market, starting out initially in Lithuania.
It appears that the restoration of Telcoin’s application services led to a significant boost in user confidence. The company reported a 400% increase in deposits compared to the previous month. Users responded favorably to Telcoin’s swift resolution of the security breach, with a ratio of $3.60 being deposited for every $1 withdrawn in the first day since the service restoration.
Telcoin’s measures, collaboration with security experts and the surge in user deposits appear to have resulted in a resilient recovery. The saga highlights the importance of prompt and transparent responses in maintaining trust in the face of crypto security issues.