Virtual Currency VC Fund Has Shut Down After Losing $150M Worth of 'Ether'

A venture capital fund that in May raised more than $150 million worth of a virtual currency known as ether has been hacked. About 3.6 million ether, equal to more than $60 million, was diverted from the main fund to another.

Founders of the fund have announced they will wind down the new financial institution and attempt to retrieve the lost ether.

"The DAO's journey is over but all funds are safe," said Stephan Tual, the founder of Slock.It, the group that created DAO. "All stolen funds will be retrieved from the attacker."

Launched in April, the DAO is a leaderless organization run entirely by computer code. Participants use tokens to vote on upcoming company decisions.

The fund aimed to use self-operating digital contracts to generate funds that would sponsor fledgling cryptocurrency projects.

The Ethereum Foundation's website states that the hacker’s account has been identified and essentially frozen.

The Wall Street Journal explains, "The attacker appeared to have exploited a loophole that essentially allowed a DAO stakeholder to create an identical fund and move money into it. But the code also imposes a waiting period that means the new fund can’t move any money for 27 days. The DAO’s founders are planning to 'fork' the code and effectively void the hacker’s transactions."

The experiment in cryptocurrency finance was criticized early on for being poorly constructed, spurring calls to halt operations until the bugs could be worked out.