Bitstamp BitCoin Exchange Offline Following Apparent $5 Million Theft

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Bitstamp, one of the largest Bitcoin exchange markets online suffered a massive cyber attack Monday, publicly announcing it was the victim of a severe hacking attack which left the company out of millions of dollars.

United Kingdom-based exchange service issued a statement Monday, noting it fell victim to a targeted attack, leaving the site offline at 4 a.m. Bitstamp halted all transactions because the company believed one users wallet had been compromised Sunday, the day prior. Bitstamp left an apology on their homepage, noting an investigation is currently underway.

Criminals were said to have gotten off with “less than 19,000” Bitcoins, which roughly accumulates to over five million dollars in stolen virtual currency.

Included in the note, Bitstamp warned users not to deposit any Bitcoins into previously issued addresses from the company, to help prevent possible further losses. Bitstamp has frozen user accounts and taken the site offline during its time of investigation, currently all deposits into addresses are blocked along with other methods of transactions.

The company assured users the Bitstamp data breach only affected users “operational wallets,” or only “a small fraction” of users Bitcoins that were stored within the Bitstamp servers.

To ease users fear, Nejc Kodrič, Bitstamp CEO and Co-founder noted on Twitter a large number of users Bitcoins were in cold storage – offline – meaning users coins were safe and still accessible.

Kodrič noted any Bitcoins stolen in the attack could be easily restored in their cold-storage reserves. He also stated users balances held prior to the security breach would not be affected and all affected customers will be honored in full.

Bitstamp co-founder and CEO wrote on Twitter the Bistamp team is currently working internally on a re-deployment that should be functional within 24-48 hours.

Many news outlets have speculated that Bitstamp was taken offline with a random number generator (RNG) attack, but the current method hackers used to hijack the service currently remains unknown. Alongside, the company has yet to release any details on how the company may have been hacked or when the service will resume in full.

“We will return to service and amend our security measures as appropriate,” the company said in a statement.

The Bitstamp breach is another major blow to Bitcoin users after the shutdown of the Japanese BitCoin exchange service, Mt. Gox, the company who lost nearly half a billion dollars in a hack attack and soon after liquidated the company itself. Shortly after, the Silk Road 2.0 was hacked, leaving the marketplace out of $2 million in Bitcoins. As well, just last month one whitehat hacker demonstrated an RNG vulnerability within blockchain.info, stealing over $200,000 in the currency, later refunding the amount as a sign of good faith.

Though Bitcoin has suffered major attacks, the service continues to thrive as larger companies are beginning to recognize the large userbase.

“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,” the company added in a statement, noting users can keep updated on the official Bitstamp Twitter page.

About Author

Brandon Stosh is the founder and CEO of www.freedomhacker.net. Stosh is a cyber security researcher and professional consultant who strives to provide reliable news on cyber-security based topics.

1 Comment

  1. First off I do not agree with exchanges or banks they both need to go away. I find it hoiarlius every time one of them gets hacked. What you argue about an exchange owner of bitcoin raising the exchange rate by 5 cents to make a profit is nothing illegal. Gas stations do the same thing, they value their gas at what price they want, that’s why gas 2 miles down the road can cost 20 cents more or less. A farmers market will value their produce at insanely higher prices then walmart because of higher quality. Furthermore, people that sell bitcoin on Ebay have significantly different values then exchanges. I’ve seen 1 BTC sell as high $30 and the exchange rate as at $11. The real issue here is not the worth of bitcoins but the cost of exchange to cash. Clearly the answer is to eliminate the need to exchange to cash entirely and earn wages with bitcoin and buy goods and services directly with bitcoin. Perhaps you can write an article describing in great detail what jobs you can work for that pay in bitcoin and and list ways one would use their bitcoins to pay for food, housing, internet, etc. This would be more beneficial to people then stirring a pot of rumors and crying wolf about the exchanges.

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