IOTA Shows Centralization Woes as Network and Wallet Gets Put on Pause

Investors in IOTA have expressed their outrage following reports that the project’s Trinity Wallet had been compromised. The IOTA foundation has launched an investigation in coordination with law enforcement and cybersecurity experts to assess the degree to which the wallet has been compromised.

Currently, #IOTA is working with law enforcement and cybersecurity experts to investigate a coordinated attack, resulting in stolen funds. To protect users, we have paused the Coordinator and advise users not to open Trinity until further notice. Updates: https://t.co/ME3Cvki3k9

— IOTA (@iotatoken) February 13, 2020

While some have praised the quick response, the reaction from investors has largely been that of anxiety. The pausing of the Coordinator and the warning to not open the wallet means that investors have no access to their funds. One common complaint is that the whole incident has shown how the network, in its current state, has acted against the very principles of cryptocurrency. The Coordinator itself is a mechanism by which IOTA maintains security, but its inclusion is controversial as it introduces an element of centralization. There are plans to remove the Coordinator through a process dubbed coordicide, which would bring decentralization, but this may take some more time. IOTA’s co-founder has talked about how the future is “full decentralization.”

IOTA Accounts Have Been Compromised

The Trinity Wallet, pinned to the top of their Twitter page with the phrase “secure software wallet,” was released in July 2019, and has been allegedly audited by security firms.

IOTA announces the full release of Trinity, a secure software wallet for IOTA tokens, developed by the IOTA Foundation. Trinity beta had over $1.8 billion of IOTA transacted and more than 160K downloads to date.https://t.co/Nb4jlgpNLP#IOTA #Trinitywallet pic.twitter.com/dUykmPXPiE

— IOTA (@iotatoken) July 2, 2019

The team reported the incident on the night of Feb 12, saying that there were “several reports of fund theft that looked out of the ordinary in a short timeframe.” This was quickly followed by the Coordinator being turned off. The next morning, it was revealed that at least 10 accounts that identified with the IOTA Foundation had been compromised, with “most evidence” pointing towards seed theft. The foundation later decided to halt value transactions, but not data transactions. The IOTA Foundation has been posting regular status updates on the incident.

MIOTA’s Price Drops Ever So Slightly

Unsurprisingly, the price of the MIOTA token has dropped, but it’s hard to tell how much of it was due to the theft and whether it will continue to fall further. The token experienced a steep decline in the first half of Feb 13, but current prices have returned to levels before the incident. The IOTA network aims to bring solutions to the Internet of Things, among other areas. It has a strong following and is considered by many to be a long-term investment.