The Cloud

Bitstamp Loses Up to $5.2M in Bitcoin Hack

The second largest bitcoin exchange for U.S. dollars says that some of its operational "wallets" were compromised.
Matthew HellerJanuary 6, 2015
Bitstamp Loses Up to $5.2M in Bitcoin Hack

In the latest cyber attack on a major bitcoin exchange, hackers have stolen up to $5.2 million from United Kingdom-based Bitstamp, forcing it to suspend operations.

Bitstamp, the second largest bitcoin exchange for U.S. dollars, said on its web site that some of its operational “wallets” were compromised in an attack on Sunday, resulting in a loss of less than 19,000 bitcoins. One bitcoin is currently worth $276.80.

The security breach “represents a small fraction of Bitstamp’s total bitcoin reserves, the overwhelming majority of which are held in secure offline cold storage systems,” the exchange said, adding that all customer balances held prior to the suspension of services “will not be affected and will be honored in full.”

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Less than a year ago, the then-largest bitcoin exchange, Mt.Gox, closed down, claiming online thieves siphoned off more than 850,000 bitcoins worth approximately $470 million at the time. In February, Bitstamp said programmers had come up with a solution to thwart cyber attacks against its platform.

Whether the Bitstamp hack will follow the same trajectory as Mt.Gox will for the most part “depend on whether the company truly had only a ‘small fraction’ of its bitcoin capital readily accessible in a hot wallet,” Ars Technica reported.

“If it’s only the hot wallet and they were using the hot wallet correctly — i.e., only having a small amount of funds in it — then everything should be OK,” one user said on the Bitcoin Talk forum.

Before the attack, Bitstamp accounted for only about 6% of bitcoin transactions, according to bitcoin statistics site Bitcoin Charts. But Wired noted that “it had become one of the longest-lived and reputable ways to buy and sell currency in bitcoin’s volatile economy.”

“We’re the backbone of the entire bitcoin industry,” CEO Nejc Kodrič told Forbes last year. “The wallet services, ATM machines, mining companies all rely on us. The price of bitcoin is the de facto price on Bitstamp. We’re the go-to exchange.”

Bitstamp said it was working to transfer a secure backup of its site onto a new safe environment and “will be bringing this online in the coming days.”

Image: Thinkstock