Unocoin Says BitGo Freeze Appears Effective Amid Suspected Wallet Backup Exploit

Unocoin said Friday that BitGo’s freeze of its corporate account appeared to be working as intended as it investigates suspected use of a multisignature wallet backup and possible asset or information losses.

The freeze followed Unocoin’s Nov. 6 instruction to BitGo, after the company detected suspicious, unauthorized activity and asked BitGo and Fireblocks to freeze corporate accounts. At that time, Unocoin had not identified any crypto asset losses.

Unocoin said BitGo has since provided requested information and explanations. It said the relevant transfers were signed and broadcast directly on-chain, outside BitGo’s platform and without BitGo’s involvement.

The suspected weakness involves a backup mechanism in BitGo’s multisignature wallet, designed to allow withdrawals if BitGo is unavailable. Unocoin is investigating how the mechanism may have been used, any crypto losses and whether information privacy was affected.

On Nov. 12, Unocoin flagged outbound transfers from an Ether (ETH) address in its BitGo wallet that had been used to fund ERC-20 tokens. The company said the account freeze and the wallet’s use of change addresses prevented it from fully reconstructing those transactions at the time. Unocoin plans to restore service after its investigation is complete.