Bitcoinica Breach Nets Hackers $87,000 In Bitcoins

dynamo52 sends this quote from Ars about a breach involving a Bitcoin exchange: "More than $87,000 worth of the virtual currency known as Bitcoin was stolen after online bandits penetrated servers belonging to Bitcoinica, prompting its operators to temporarily shutter the trading platform to contain the damage. Friday's theft came after hackers accessed Bitcoinica's production servers and depleted its online wallet of 18,547 BTC, as individual Bitcoin units are called, company officials said in a blog post published on Friday. It said the heist affected only a small fraction of Bitcoinica's overall bitcoin deposits and that all withdrawal requests will be honored once the platform reopens." Reader linhares points out a forum post discussing how the attacker(s) hinted at a 'mass leak' in the near future. This attack comes shortly after a leak of a different sort — an FBI document (PDF) about Bitcoin found it way onto the internet. It seems they're worried about the virtual currency's potential use in criminal activities.

Comments

I think it's kind a cool...

[Razgorov Prikazka]

...That the concept of Bitcoins, nor the encryption behind it, nor anything like that is being breached.
It's always some kind of security breach that allows malicious folk to get the coins themselves. Or people that get their coins stolen from a leaky windhose box. Something like that.
So that is cudo`s for Bitcoin huh? I mean, I never heard some story like "hackers have found a way to create Bitcoins without all the hassle (and made it into a nice gui-ed program)" Enter the amount you wish, hit 'generate' and within 2 seconds your bitcoins are ready to be used.
It is a solid piece of work isn't it?

Re:I think it's kind a cool...

[jjohnson]

It's not kudos for bitcoin even if the design itself is proven perfect, because bitcoins are useless without practical implementations and real markets, and if those real-world applications continually fail for external reasons, the bitcoin economy will never take off.

Put a little differently, it doesn't matter how perfect bitcoin is on paper. If it can't be made to work in real life, it's useless. And if the computing infrastructure on which bitcoin transactions occur is fundamentally un-securable, then it can't be made to work in real life. It's like deploying an uncrackable ATM in a crime-ridden neighbourhood. It doesn't matter that you can't break into the ATM if you just have to wait for someone to withdraw cash and then rob them.

Re:And nothing of value was lost.

[bonch]

Ironically, Bitcoin serves as a pretty good argument that there should be substantial regulation of financial service providers since people that don't know computers keep losing hundreds of thousands of dollars.

The root cause of this problem is the *admins*

[Michalson]

"The root cause of this problem is an email server compromise. The email server belongs to one of our team members."

A poorly secured email server is not the failure in this statement.

The failure is what was a non-essential piece of software, what sounds like someone's personal software, doing on this server or even on the same firewalled subnet?

As someone who pumped and dumped...

[Anonymous Coward]

Bitcoin was an interesting experiment.

I was one of the lucky ones- I got in before Bitcoin hit prime time for its 15 minutes of fame. Back then mining actually got you something worthwhile when you could dedicate a couple of GPUs and one or two computers to it (back then FPGAs weren't even being discussed that much). It managed to pay for four separate computers, which I later overhauled and replaced the motherboards on so I could stuff three GPUs in each. A few months ago I decided to shut it down (after witnessing random things like the rollback of an entire market because someone sold too many BTCs and it pissed off the big guys who lost a lot of money because they didn't see it coming) and started to cash out. At the end of it all (after I sold my equipment- though that only accounted for ~10% of my total catch), I'd made enough to pay off my car and both me and my fiancee went on a nice trip to Maui for two weeks.

A friend recently "discovered" BTC and came to me for information on "how to get rich quick". It took me over two hours to convince him that it wasn't worth it anymore, that he could probably pump a good $10K into equipment and not even make back the money power would cost him to run it all. You'd have to invest ten times that into exotic FPGA hardware just to make any reasonable amount of income, and even then I doubt you'll ever pay for the hardware itself before the system completely crashes.

BTC is, ultimately, a failed experiment. Now that the system has gotten rolling there is little reason to use it for anything other then illegal goods, and nobody wants to be associated with a currency that is predominantly used to move dirty money or pay for black market items. I suppose things might be a bit better if we actually had reasonable exchanges running, but for the most part what is out there right now (including MtGox- which formerly stood for "Magic the Gathering Online eXchange") is just about as untrustworthy as the people using it.

If you're a potential miner, my advice is to stay away from BTC. If you weren't there when it started, then you're basically not going to make any money. Those few elites still making money off the system will soon leave as the entire thing becomes unprofitable for even them, and then when they cash out the entire system will crash hard- and any BTC you might own will be worth nothing.

-AC

Re:And nothing of value was lost.

[History's Coming To]

So why post anonymously? I never heard a better post for justifying a link to your shop.