Original - Odaily

Author - Loopy

Today, another major security incident occurred in the encryption world. SlowMist issued a security alert stating that the Mixin Network cloud service provider database was attacked on September 23, involving an amount of approximately US$200 million, including approximately US$94.48 million in ETH, US$23.55 million in DAI, and US$23.3 million. of BTC.

The reason why this security incident attracted such strong attention is because Li Xiaolai, the first generation top player in the currency circle, expressed his support for this project.

How did $200 million disappear?

On September 23, Mixin Network’s cloud service provider database was hacked. The team said it has contacted Google and blockchain security firm SlowMist to assist with the investigation.

According to preliminary verification, the funds involved are approximately US$200 million. Mixin Network deposit and withdrawal services have been temporarily suspended. After discussion and consensus among all nodes, these services will be reopened once the vulnerability is confirmed and fixed. During this period, transfers will not be affected.

Mixin founder Feng Xiaodong also conducted a live broadcast today to explain the incident. Mixin founder Feng Xiaodong responded in the live broadcast that the damaged assets were mainly Bitcoin core assets, and assets such as BOX and XIN were not seriously stolen. The specific attack situation cannot yet be disclosed.

Regarding the stolen assets, the official said that the current maximum compensation is 50%, and the remaining part will be compensated in the form of bond tokens. In the future, the official will use profits to buy back. In addition, Feng Xiaodong also said that Mixin will also launch a new system for user asset migration, but the assets that can be transferred are only half of the users balance for the time being.

A controversial phenomenon is that the officials quick response not only failed to calm the users quarrels, but also made the incident more suspenseful - some community users suspected that there was a security incident or that the incident was self-inflicted.

Crypto’s Original Sin: Centralization

Whenever a large-scale security incident occurs, the encryption world once again begins to examine the vision of encryption-decentralization. There is no doubt that almost the vast majority of large-scale security incidents are due to extremely high centralization risks in projects.

Although Mixin Network is a public chain project, strangely, users are exposed to extremely high centralization risks. Unlike EOA wallets, Mixin is not a decentralized wallet. The product relies on mobile phone numbers and PINs for authentication, with the team keeping private keys on behalf of the user. It was only after this attack that we discovered that the original storage method was extremely simple and crude—save the private key directly on the server.

This also laid the groundwork for this security incident. Users do not control their own cryptocurrencies. All cryptocurrencies are officially kept by Mixin. This cannot even be called a wallet. It may be more accurate to call it custody.

Coingecko data shows that despite the large-scale security incident, Mixin’s native token XIN has not suffered a heavy blow. Its currency price once fell by about 8% and has gradually recovered.

In addition, DeFiLlama data shows that Mixin’s TVL has dropped by approximately $30 million since the attack and currently stands at $350 million.

Li Xiaolai: Long-term investment Mixin

In early 2020, Li Xiaolai praised the Mixin project in an interview with the Korean version of CoinDesk.

He publicly stated that he owns digital assets worth approximately US$1 billion stored in cold wallets, and the main targets he holds are BTC, EOS, and Mixin. Li Xiaolai also emphasized: The key to successful investment is to insist on long-term investment - all successful investors have this same trait.

But if someone really makes a long-term investment in Mixin, they may be hit hard by this project. Coingecko data shows that the XIN token ATH price is US$2,095, and the current price is US$200, which has fallen by more than 90%.

Although various public information indicates that the founder of Mixin is Feng Xiaodong, some investors who entered the industry earlier may still remember Li Xiaolai’s support for Mixin. Feng and Li are quite close. Since Mixin is inextricably linked to Li Xiaolai, when this project is mentioned, people regard it as being strongly bound to Li Xiaolai personally.

After a security incident occurred in Mixin today, a Weibo post by Jiang Zhuoer published in 2019 was also uncovered. Jiang Zhuoer once wrote, If the operator is stolen, your BTC will be gone. Unexpectedly, his words came true.

Looking back at the history of Mixin, it is not difficult to find that this is not the first time that the product has had an accident.

In March 2020, two nodes of the Mixin network, Fox.ONE and Exin, issued a statement last night saying that the SS private key of their joint node was lost, resulting in the loss of the original assets of 10,000 XIN in the joint node and all earnings since March 21, 2020. None can be taken out.

Mixin has also aroused doubts from the community because of its routine check-in. When it first started, Mixin once promoted “signing in to get Bitcoins.” Calculated at the current price, as long as you insist on signing in for 10 years, you can get more than 300,000 yuan in Bitcoin. But users soon discovered that the sign-in threshold was getting higher and higher. They needed to invite new users, participate in brainwashing questions, and even invest money.

Conclusion

Not long after Mixin was launched, Li Xiaolai also launched a new project called B.watch, which was also regarded as an extension of the Mixin ecosystem. BOX is a fund product designed and issued by Li Xiaolai. The components are composed of three underlying assets, namely BTC, EOS and XIN.

BOX, also Li Xiaolai’s “concept coin”, also experienced a slight decline today. Coingecko data shows that BOX fell from more than 3.1 US dollars to a minimum of 3.02 US dollars. Currently, BOX’s 24-hour trading volume is only about $180,000.

Another interesting fact about the Mixin project is that Mixin is also related to another powerful personal IP-Luo Yonghao.

Tianyancha data shows that Li Xiaolai and Mixin founder Feng Xiaodong are both shareholders of Fegelman (Beijing) Technology Co., Ltd. In February 2016, Luo Yonghao became a shareholder of Fegelman, holding 4% of the shares, and withdrew from the ranks of Fegelman shareholders in February this year.

Luo Yonghao once posted on Weibo in 2018: I once invested more than 1 million in currency speculation, and I have never cared about it since then, and these coins have risen to more than 30 million.

Nowadays, Mixin, like Li Xiaolai, has lost its glory and user assets are facing huge losses. Relying on marketing and gimmicks to attract funds, and practicing centralization in the name of decentralization, the market chaos has never stopped.