By the looks of things, there are even more problems brewing in the world of digital currency cloud mining, as the popular LTCGear service has been delaying payments for nearly three months now. It has to be said however that their service operators are still active, as they recently reminded their customers about the yearly maintenance fee which has to be paid. Something smells fishy to me, so let’s take a look, shall we?
LTCGear – One of the Many Victims of the Falling Bitcoin Price
Digital currency cloud mining has proven to be unprofitable for a few months now, and most companies have either paused operations, converted all altcoin mining contracts to Bitcoin mining contracts, or lowered the maintenance fees drastically to the point where the company is not making much profit at all at this point in time.
While the focus has been on some of the bigger cloud mining platforms such as Cex.io, Cointellect, Genesis-Mining and ZeusHash, there are a ton of other cloud mining operations in existence to this date. LTCGear is one of the major altcoin cloud mining “players”, and they have always paid out on time, as well as responded to customer inquiries in a reasonable timeframe.
In fact, by the end of 2014, LTCGear was still looking extremely profitable to join, and I almost joined the fray. Luckily for me, I decided to hold my Bitcoins in my wallet though, as the first reports of missing payouts started popping up in January. In fact, these issues were noticeable in December as well, but most customers blamed the delays on the end of year holidays and such.
The matter seemed easily explainable however, as the LTCGear owner reported that the site was suffering from some technical malfunctions. Given the massive customer base LTCGear had managed to build up in a rather short timespan, this explanation seemed rather logical at the time and as customers were being kept up-to-date, no one suspected any trouble brewing just yet.
Early January, a new announcement appeared on the LTCGear website saying that, once the technical issues had been resolved, withdraw on demand would be enabled again on January 9th. Unfortunately for every LTCGear customer, the withdraw on demand feature is still unavailable to this day, and no payouts have been issued since December 2014.
Fake Shares & Orders, DDoS Attacks & Hijacking Payment Addresses
According to the latest post made on the LTCGear website, a focused series of attacks have been executed against the infrastructure connecting LTCGear with their users over the past few months. As a result of these attacks, the website, databases and various layers of “behind the scenes” management tools have been affected, which is the reason for the payout delays.
Attacks ranged from standard DDoS attacks to the creation of fake shares and orders and even hijacking payment address for LTCGear orders and payouts. Needless to say, this caused a whole lot of sorting out to be done, especially in regards to user details, both also the management of new ASIC hardware and share multiplications.
Several of the malicious Bitcoin addresses involved have been identified by the LTCGear owner, and appropriate action has been taken at this point in time. However, there is still a huge list of users that tried to gamble the system, and no decision has been made on whether to report them to authorities or make the complete list publicly available for everyone to see.
In regards to the LTCGear infrastructure being damaged and exploited, countermeasures will be put in place to avoid these kinds of attacks in the future. As of this writing, we have not received any exact details on how the LTCGear owner plans to prevent these attacks in the future, but we are keeping our ear to the ground.
No Legit Payouts For The Time Being
With all of what has been going on at LTCGear, the owner feels it was impossible to process any payout at all, especially not when there was so much sorting out to do in regards to fake shares and order manipulation. Databases and backup databases had to be cleaned out, which is a very time consuming process to begin with.
Due to the various types of DDoS attacks aimed at the LTCGear infrastructure, it was deemed unfeasible to keep on running weekly payouts from December 2014 forward. As these attacks interrupt each and every payout attempt for both December & January so far, all payments have been moved into the user balances for the time being until a permanent solution is found.
In fact, a handful of customers actually have the option to withdraw funds, and that number will be increased gradually as more and more time elapses, once the databases have been cleaned up and only legitimate users remain. No official ETA’s have been provided to us at this point in time in regards to when the entire user database can receive payouts again.
Yearly Maintenance Fees & New ASICs
Business at LTCGear is resuming however, and as a result, all users are expected to pay their “end of year” maintenance fees for their shares, as you can see in the following screenshot :
Last but not least, there is also good news, as the LTCGear owner has confirmed that new ASICs will be delivered in February of 2015. The original delivery date was moved back a bit because of the ongoing issues and attacks.