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Major Bitcoin Exchange Bitstamp Warns of Security Compromise

Bitstamp Hack

Bitstamp Hack

[UPDATE] – Bitstamp, one of the largest bitcoin exchange services, suspended services on Monday while warning users that its platform has been compromised.

“We have reason to believe that one of Bitstamp’s operational wallets was compromised on January 4th, 2015,” the company orginally wrote in a note posted to its main website Monday morning.

The company later updated its notice to confirm how many Bitcoins were stolen. “On January 4th, some of Bitstamp’s operational wallets were compromised, resulting in a loss of less than 19,000 BTC.” Based the current vaulation of $275, that total adds up to roughly US$5.2 million. 

While the company aimed to ease concerns, saying that it maintains more than enough offline reserves to cover the compromised bitcoins, it warned customers not to make deposits to previously issued bitcoin deposit addresses.

“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,” the Bitstamp Team said.

According to the company, service will remain suspended during an investigation and will be restored when the company believes its security measures are deemed appropriate.

According to one Reddit reader who recently made 2 deposits to Bitstamp, there were some concerning issues with the service early Monday. “After lagging 7 confirmations behind on the blockchain, they each disappeared from the incoming transactions list WITHOUT updating my balance, which still sits at zero bitcoins,” the user wrote

Bitstamp has been reported to be the world’s second largest Bitcoin exchange by volume. The UK-based company is led by CEO Nejc Kodrič, who co-founded the company in 2011 with Damijan Merlak.

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Bitcoin exchanges and related service providers have been under attack for some time.

In early 2014, bitcoin giant MtGox was forced to freeze withdrawals as a result of what the company claims was a bug in its software that allowed hackers to steal bitcoins. Soon after, the exchange filed for bankruptcy protection and said that it had lost 850,000 coins, which were worth nearly $500 million at the time.   

In March 2014, Flexcoin said hackers stole 896 bitcoins valued at more than $600,000 from its “hot wallet”, while in the same month Poloniex said an attack against its platform cost users 12.3 percent of their bitcoins.

Bitcoin owners have also been constantly targeted by Phishing attacks.

In February of last year, a Trojan was found being used to steal bitcoins from Mac OS X users. The malware, dubbed OSX/CoinThief.A, sniffs web traffic for login information for popular bitcoin sites. 

In February 2014, cyber criminals using a botnet made off with at least $220,000 worth of Bitcoins and other virtual currencies. At the time, the attackers collected roughly $220,000 worth of virtual currencies such as Bitcoin, LiteCoin, FeatherCoin and 27 others.

Next month at the Suits and Spooks Conference in Washington, D.C., a panel will discuss some of the challenges that international banks must address with the growing use of Bitcoin and other forms of crypto-currency. Panelists include Ben Milne (founder of Dwolla), Edward V. Marshall (V.P., Credit Suisse), and Wesley Bull (CSO of NVIDIA). A limited number of seats are available.

Related: How Hackers Target Cloud Services for Bitcoin Profit

Written By

For more than 15 years, Mike Lennon has been closely monitoring the threat landscape and analyzing trends in the National Security and enterprise cybersecurity space. In his role at SecurityWeek, he oversees the editorial direction of the publication and is the Director of several leading security industry conferences around the world.

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