Someone Stole $5 Million Worth of Bitcoin this Weekend

Someone Stole $5 Million Worth of Bitcoin this Weekend

Bitcoins

The second largest Bitcoin exchange service is now offline.

One of the largest Bitcoin-currency exchanges in the world is currently offline, after an unknown thief made off with $5 million of its cryptocurrency holdings.

Bitstamp, which is based in the U.K., is one of the go-to sites for people who want to store Bitcoin online, or exchange the cryptocurrency for real-world cash. Bitcoins are stored in "wallets," be it your own wallet, or a larger one controlled by a company like Bitstamp.

This weekend, Bitstamp suspended operations after "one of Bitstamp's operational wallets was compromised," early on Sunday. Bitstamp says it stores the majority of its customer's Bitcoin offline in "cold storage," meaning computer systems completely cut off from the Internet. But Bitstamp "maintains a small fraction of customer bitcoins in online systems." So 19,000 Bitcoins (worth roughly USD $5 million) is apparently a small amount. Bitstamp's full statement on the theft is included below.

Along with suspending operations, Bitstamp has asked that its customers immediately stop making "deposits to previously issued Bitcoin deposit addresses."

Bitstamp insists that, while operations are currently suspended, customers of the service will have access to their full funds soon, and no customer will lose Bitcoin as a result of the theft.

Whether or not customers will lose money is another story, however, as the theft has contributed to a sizable drop in Bitcoin's worth -- down to a low of about $260 on Sunday (compared to $314 on Saturday morning). The price has since rebounded to between $280-$285 (depending on which index you use).

While Bitstamp is assuring customers that no Bitcoin will be lost, this certainly serves as a warning that the world of cryptocurrency is fraught with peril (and no guarantees of money safety, as is afforded by many governments with more...official currencies).

Source: CNBC

January 6, 2015, 12:34am UTC: We have temporarily suspended Bitstamp services. Bitstamp customers can rest assured that their bitcoins held with us prior to temporary suspension of services on January 5th (at 9am UTC) are completely safe and will be honored in full.

On January 4th, some of Bitstamp's operational wallets were compromised, resulting in a loss of less than 19,000 BTC. Upon learning of the breach, we immediately notified all customers that they should no longer make deposits to previously issued bitcoin deposit addresses. To repeat, customers should NOT make any deposits to previously issued bitcoin deposit addresses. As an additional security measure, we suspended our systems while we fully investigate the incident and actively engage with law enforcement officials.

This breach represents a small fraction of Bitstamp's total bitcoin reserves, the overwhelming majority of which are held in secure offline cold storage systems. We would like to reassure all Bitstamp customers that their balances held prior to our temporary suspension of services will not be affected and will be honored in full.

We appreciate customers' patience during this disruption of services. We are working to transfer a secure backup of the Bitstamp site onto a new safe environment and will be bringing this online in the coming days. Customers can stay informed via updates on our website, on Twitter (@Bitstamp) and through Bitstamp customer support at [email protected].

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Not really much different than a bank being robbed, it's an annoyance but they will replace your funds and investigate and chase the thief themselves.

Bitcoins are still a thing? With the lack of growth and the collapse in interest by the general public it's a genuine shock it isn't only used by criminals.

Devin Connors:

Bitstamp, which is based in the U.K., is one of the go-to sites for people who want to store Bitcoin online,

and here is the entire problem. you do not for any reason store bitcoins online. this is just stupid to the level of microwaving your phone.

image
(Obligatory, given the news report.)

Yeah, this won't get anywhere. It's still play-money. Worthless.

Update: actually 4 million dollarsworth of Bitcoin were stolen.

Update2: actually 4.5 million dollarsworth of Bitcoin were stolen.

Update3: actually 3.5 million dollarsworth of Bitcoin were stolen.

inu-kun:
Update: actually 4 million dollarsworth of Bitcoin were stolen.

Update2: actually 4.5 million dollarsworth of Bitcoin were stolen.

Update3: actually 3.5 million dollarsworth of Bitcoin were stolen.

That took me a moment. But when I got it, it was worth it.

You deserve some kind of bitcoin shaped cookie.

Yes, that's no surprise. When you are effectively the equivalent of a bank. (and one operating entirely online no less!)
You really can lose amounts like that without it being too much of a big deal.

As for why they had that much bitcoin on live internet-connected servers...

Well, it's for the same reason a real bank has money in it's atm, money behind the counters, AND money in the vault.

The stuff in the ATM and behind the counter is less secure than what's in the vault, but it is non-trivial to get into the vault without advance warning.

I'm surprised Bitcion still has value considering previous users have given up on it alongside all other forms of crypto-currency in the past; it's pretty much been reduced to a few intense cliques and forums on the internet. Stories like this are full of irony, reminding people on why having state-backed and protected currency is often a good thing, especially when most of it is kept in a massive vault surrounded by the best security money can buy. I'll never understand the idea that crypto-currency will somehow exceed fait currency.

I've heard a lot about Bitcoin, but actually have very little understand of how it works.

Is there a video that can explain why it's so ridiculous?

That's a lot of Monopoly Games to get that much Monopoly Money, I estimate ~500 boxes to get 5 million.

inu-kun:
Update: actually 4 million dollarsworth of Bitcoin were stolen.

Update2: actually 4.5 million dollarsworth of Bitcoin were stolen.

Update3: actually 3.5 million dollarsworth of Bitcoin were stolen.

lmao.

Id love to know what the thief will do with the loot, if he/they do it right they should cash a lil bit out every time the bitcoin value goes up and they may well get much more than 5 mil outta it.

or much much less if they wait to long.

I'm still failing to grasp the difference between Bitcoins and WoW gold save apparently a strong belief system that seems anchored in leprechauns and Faeries?

Burnouts3s3:
I've heard a lot about Bitcoin, but actually have very little understand of how it works.

Is there a video that can explain why it's so ridiculous?

Most of the people who think its ridiculous haven't used it, i'd just ignore them. It's just money that exists online, pretty much everyone I know who got into bitcoin early made their money back early, took their original money out of the system and now just keep making their investment go up and up with minimal effort.

Its only dumb if you hate easy money.

They wont be caught as i thought the idea of bitcoin is that its untraceable? Its why criminals like to use it.

That's actually not true. In the blockchain you can trace every transaction of a bitcoin. If someone really wanted the information, it's there to be found. Connecting the transaction to an IP might be difficult but I doubt a government would hesitate to break their own rules to get the info.

Dogstile:

Its only dumb if you hate easy money.

There is no redder flag for a scam then this type of comment, though then again it's literally impossible for anyone not already using bitcoins to make a profit at this point due to the collapse in the market for them.

Burnouts3s3:
I've heard a lot about Bitcoin, but actually have very little understand of how it works.

Is there a video that can explain why it's so ridiculous?

It's basically a fake currency that only exists on the internet with no government backing or bank protection and whose only features are the supposedly (but false) notion it can't be tracked coupled with the fact that some of the people who where in the first wave of adopters made big money due to buying them when they where cheap and selling when more people tried to get into it. It's basically a ponzi scheme mixed with a very peculiar notion of how money works.

It's for this reason the bulk of users are criminals, people trying to make money on it as a investment (which is impossible at this point) and people who use the internet waaaaaaay to much. It's monopoly money.

Dogstile:
How do you know if you've never tried it?

One of the biggest and most-transparent lures into dubious practices, both business and not. Please don't confuse people with rhetoric and heresay. If you want to make a point, go ahead, but that statement will not fly.

Burnouts3s3:
I've heard a lot about Bitcoin, but actually have very little understand of how it works.

Is there a video that can explain why it's so ridiculous?

I found a playlist: https://www.youtube.com/playlist?list=PLNK_isA40yp3U_xMFW4Fu9Pn3_KR_b9zx

Decide for yourself.

faefrost:
I'm still failing to grasp the difference between Bitcoins and WoW gold save apparently a strong belief system that seems anchored in leprechauns and Faeries?

It's sort of the difference between stamp collecting being a serious hobby that builds character and video games being a frivolous waste of time.

Enough people have decided that the pieces of paper with fancy government logos on them are worth something that they become worth something. You are a sucker for accepting pieces of paper, but the scam is big enough that the order it provides has real use that (maybe?) outweighs the downsides of being a sucker. The assumption is that society will continue to exist and accept the paper tomorrow, so it's okay to be holding them at the end of today.

Most people don't believe WoW gold is "real", so it has little value.

BitCoin...is somewhere in between the two. Libertarians (and other anarchic folks) have thrown their weight behind it, so as long as those groups are generally considered sane, serious people, so too can Bitcoin snare a bit of their legitimacy for itself. If enough people get on board it becomes a real live currency that only a fool would question the worth of. If its cheerleaders abandon it, it vanishes into the dustbins of history and only a fool would think it could have worked. It's more about psychology than anything else.

Burnouts3s3:
I've heard a lot about Bitcoin, but actually have very little understand of how it works.

Is there a video that can explain why it's so ridiculous?

It is an electronic currency, not based on any actual nation or central bank (as is typical of normal currencies like dollars or euros). The problem with bitcoins is that it behaves less like an actually currency (used for buying stuff) and more like a commodity (which you invest in, like stocks or shares, to resell at a later date). Specifically, it behaves like a volatile commodity that can massively change in value from one moment to the next. If you are Wily, you probably could make money off of playing the bitcoins, buying cheap and selling expensive, but it is so volatile it isn't recommended as a safe investment. Even less so for savings or buying things, as your savings could be wiped out, or lose all value in an instant. That doesn't stop people declaring it as the future of money though.

inu-kun:
Update: actually 4 million dollarsworth of Bitcoin were stolen.

Update2: actually 4.5 million dollarsworth of Bitcoin were stolen.

Update3: actually 3.5 million dollarsworth of Bitcoin were stolen.

Ahahaha, also, the 2 year view of http://bitcoinity.org/markets continues to resemble http://www.macobserver.com/imgs/tmo_articles/20130412bitcoinsnarkchart.gif (with the May 2014 uptick being primarily people buying into distributed mining schemes / whales padding their virtual pet project with significant personal investment - as the overall value of a few hundred million is still small enough for a handful of wealthy investors to visibly impact it)

The main issue with Bitcoin is it can't scale with demand (network/power/storage usage) if it ever did become popular. But has some interesting ideas for a distributed transaction log that could be applied to several other things (like secure messaging - use public encryption to store anonymous broadcasts in the blockchain etc)

 

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