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Alleged Bitcoin Scam Leaves Millions Missing
First time accepted submitter OutOnARock writes Yahoo Finance is reporting on the latest Bitcoin scam, this time from Hong Kong. "Investors in a Hong Kong-based Bitcoin trading company fear they have fallen victim to a scam after it closed down, a lawmaker said Monday, adding losses could total HK$3 billion ($387 million). Leung Yiu-chung said his office recently received reports from dozens of investors in Hong Kong who paid a total of HK$40 million ($5.16 million) into the scheme run online by MyCoin, but the total loss may be vastly more. 'The number of cases is increasing. These two days I received calls about more than 30 cases. We estimate more than 3,000 people and HK$3 billion are involved,' he told AFP."
>Bitcoin is like regular bank accounts where most of the moeny is in virtual ones and zeros.
No. Nope. Not. Bitcoin is like a banking system without a bank, where your friends and relatives keep slips of paper saying (anonymously) who is owed what on a dollar bill by dollar bill basis. When you want to use your money, it becomes hard to get anyone to actually give you cash for it. People are trying to find ways to change a few of those slips of paper without you knowing.
The whole thing is a nightmare. These scams will continue until people get burned enough to walk away.
Wallets get cracked fairly routinely; but (to the best of my knowledge) only by virtue of being stored on systems that are compromised by some other means. The bitcoin mechanism alone is pretty solid; but that means very little if you can get access to the wallet by attacking the user's system at some other level and then just reading them off the filesystem.
For whatever reason, whoever did the core work on bitcoins appears to have been pretty good; but the quality and competence of most of the surrounding activity and infrastructure are somewhere between 'crap' and 'are you sure that this isn't a parody?'