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CryptoBridge Exchange Walks PirateChain Plank in ARRR Counterfeit Scandal

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August 24 2019 — A CryptoBridge Exchange accounting bug allegedly led to the “counterfeiting” of up to 1.8 million PirateChain ARRR tokens, almost 2% of the total supply.

It should be stressed that no real ARRR was created out of thin air, but rather the exchange’s native BRIDGE.ARRR proxy token which is used for trading and is reflected in user balances.

The PirateChain (ARRR) / Crypto Bridge Exchange (CB) fiasco reached a head earlier today in the PirateChain discord after the exchange finally published a statement [2] ending over six months of silence regarding its closure of Piratechain (ARRR) deposits and withdrawals. 

Their statement comes in response to an explosive announcement in Pirate’s discord from two days ago alleging that following information provided by CB devs: 

“CryptoBridge’s faulty record-keeping method that showed users balances as higher than they should be after partially withdrawing funds.”

As jl777c, Komodo Lead and PirateChain Core Dev, explained in the PirateChain discord:

deposit 10,000
withdraw 1
get 9999 tokens for free!
repeat it 100 times
sell on CB until there are no decent buys, withdraw and dump on other exchanges
NONE of that is the fault of ARRR

It is speculated that as many as 1.8 million ARRR were “counterfeited” in this manner, then withdrawn and sold on CB and other exchanges until the CB wallet was drained. The alleged counterfeiters are purported to be a small number of users on the exchange who took advantage of the accounting bug.

The price of Pirate has plummeted in recent weeks down almost 90% from its 28 cent high in late June to under 3 cents a few days ago. An angry Pirate community member commented “I lost 2/3 of BTC value in ARRR cause of CB.”

CoinGecko chart

The PirateChain statement in its entirety:

Dear fellow Pirates, 

The ongoing incompetence of the Cryptobridge Exchange has finally come to a pustulated head. 

They have informed our devs that they relied on on-chain data (individual addresses) rather than using a local database to account for funds. It was Cryptobridge’s faulty record-keeping method that showed users balances as higher than they should be after partially withdrawing funds. It allowed users to take advantage of the system and withdraw more than they actually had, taking ARRR from the exchange that didnt belong to them. This also enabled clients to withdraw and dump ARRR across exchanges at whatever price they could get, leaving users with actual ARRR on cryptobridge without a way to withdraw their funds since cryptobridge may not actually have the ARRR to give. 

This is the most likely reason for the massive fall in value recently. However, it is still unknown at this stage how long it has been going on, but cryptobridge had known for quite some time. 

THIS HAS NOTHING TO DO WITH PIRATE CHAIN, it was Cryptobridges faulty record keeping method that allowed this to happen. 

Given the continued trading, it is rather obvious now that they are acting fraudulently (fractional Reserve) which will effect their business identity and standing in many communities, including it’s status as a CoinMarketCap listed exchange. 

At best, they will halt trading, purchase ARRR at market rate on some other exchange and provide the correct balances for their clients. 

At worst, they will continue trading with the illegitimate proxy tokens (faux Dex) while the ARRR withdrawal problems compound and try to push the blame onto the tech, even though our devs have been in constant contact with them, sometimes waiting for weeks to hear back from the devs at cryptobridge. 

As of today we strongly recommend that you stop depositing and trading ARRR on the Crypto Bridge Exchange with immediate effect.


Earlier today CryptoBridge broke their 6 month silence and incensed the ARRR community by issuing a response which seems to apportion some blame on the Piratchain wallet. Their complete statement reads:

We have been silent for a long time on the status of PirateChain (ARRR) and we regret the inconvenience caused. In this post, we would like to give you a quick summary on what happened and what our next steps are.

As some of you know, we had to disable deposits & withdrawals months ago after our deposit wallet, heavily used for mining, had grown to multiple GBs in size and become unresponsive after just a few days of running. It took several rescan attempts, each taking multiple days to complete, in order to restore its funds. This is mainly where the delays came from, together with the lack of Z-transaction commands required for on-chain bookkeeping as well as absence of any outgoing transactions’ history.

Looking through all transactions on our deposit wallet we found that, in some cases, we issued transaction change in addition to the actual transaction amount. This was obviously not intended and we are or will be in touch with those users to ensure proper balances which of course includes reimbursing users which are missing their valid withdrawals.

We kindly ask for your patience while we are verifying our numbers and making sure the issue mentioned above does not happen again.

jl777c concluded:

“they try to justify their error by partly blaming ARRR.”

Matters were made worse when an unofficial CB spokesperson posted in Pirate’s discord

“Don’t use or trade on @CryptoBridge”

That’s one of your devs
Because he couldn’t develop a functioning wallet, he blames the exchange
Doesn’t look great, and really irresponsible to keep sending this message out when the CB team have just made an announcement to fix any problems with your crappy coin

Upset with critics of CryptoBridge claiming CB is “not a real DEX” the unofficial spokesperson continued

It’s disgusting really you are such a rude community


PirateChain vehemently defends its wallets and developers with PirateChain’s Captain FishyGuts stating

We’ve been trying to help them with direct developer contact since FEBRUARY. We have 4 functioning wallets. You should become more knowledgeable on issues before you start slinging mud. We have waited patiently for 6 months while CB didn’t do a thing. We have had devs in direct contact in private avenues for months. Plus, ALL other coins are not working fine. I have received countless messages from users of multiple coins that they have issues with CB.

CryptoBridge have said they will reimburse users and while this will go some way to settle tensions should they follow through, their lack of contrition, long silence and finger-pointing has resulted in a total breakdown of trust and led to growing hostility and anger.

This may not be the first accounting bug on CryptoBridge either. Reports from 2018 allege RavenCoin (RAVEN) suffered a similar fate from irregular crediting (counterfeiting). Once again the CB statement from October 2018 (months after the irregularities were first noticed) does not go into any detail or mention specifics.

The CryptoBridge Team were asked for comment but declined and requested this article not be linked on CB channels.


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ggmesh
2018 got REKT, 2019 started writing No bank account since 2015, no Facebook account, ever Privacy advocate with concerns over public blockchains Currently exploring the Komodo Ecosystem

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1 Comment

  1. So essentially, ARR devs exploited the Cryptobridge code, drained their hot wallet, dumped on their community, the price of ARR died and now they blame the exchange, no wonder that guy said they were a toxic salty community LOL!

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