- Swiss Bitcoin Pay informed the public that it will temporarily cease operations after a serious hacking incident.
- However, the announcement also indicated that it isn’t really operating as a non-custodial platform.
Non-custodial payment processor Swiss Bitcoin (BTC) Pay announced it is temporarily shutting down its operations after a major hack. The incident exposed sensitive user details, but the platform has yet to determine the full extent of the attack.
Meanwhile, users raised red flags over the company’s recent statement, with many questioning its marketing as a “non-custodial” platform.
The Swiss Bitcoin Pay Exploit
According to Swiss Bitcoin Pay’s post on X, a malicious actor has accessed its internal systems. It believes that the attack exposed customer data, including personal email addresses, Bitcoin wallet addresses, IBANs, transaction history, and hashed passwords.
As the investigation continues, the company is not yet certain whether the perpetrator obtained other important information. However, it assured users that their funds are safe. It also promised to compensate them for any missing funds.
Swiss Bitcoin Pay said it has no reopening date yet, as it’s still making sure every vulnerability in its system has been patched. Nonetheless, it claimed that its team is “working as quickly as possible to secure everything properly” so the platform can come back stronger.
Questions on ‘Non-Custodial’ Feature
Amid the unfolding drama, some people asked why Swiss Bitcoin Pay had to ensure that its users’ funds are safe. Moreover, they sought clarity as to why it promised to return any missing funds when, in fact, it has promoted itself as a non-custodial platform.
In crypto, a non-custodial arrangement means users have total and exclusive control over their digital assets and private keys. Intermediaries like exchanges or payment processors should not have access to those funds. Hence, Swiss Bitcoin Pay’s promise to compensate customers for lost funds doesn’t make sense.
As a result, Swiss Bitcoin Pay explained that it automatically batches all incoming Lightning transactions to one on-chain UTXO (Unspent Transaction Output) on a daily, weekly, and monthly basis. For this reason, it needs to hold some user funds temporarily. But then again, it pointed out that the assets it briefly retains are “not significant amounts.”
Critics retorted that they don’t care about Swiss Bitcoin Pay’s reason for keeping users’ funds. Regardless of the duration or amount involved, the real issue is how the platform is selling its service as “non-custodial,” which many believe is misleading.
