Cryptsy Bitcoin Trader Robbed, Blames Backdoor In the Code of a Wallet (softpedia.com)

An anonymous reader writes: Cryptsy, a website for trading Bitcoin, Litecoin, and other smaller crypto-currencies, announced a security incident, accusing the developer of Lucky7Coin of stealing 13,000 Bitcoin and 300,000 Litecoin, which at today's rate stands more than $5.7 million / €5.2 million. Cryptsy says "the developer of Lucky7Coin had placed an IRC backdoor into the code of [a] wallet, which allowed it to act as a sort of a Trojan, or command and control unit." Coincidentally this also explains why two days after the attack was carried out, exactly 300,000 Litecoin were dumped on the BTC-e exchange, driving Litecoin price down from $9.5 to $2.

Comments

No sympathy here.

[Anonymous Coward]

Crypto currencies are like the wild wild west of monetary transactions. Unless you are doing something that requires absolute discretion, it's really not worth the risk.

Over and over

[JustAnotherOldGuy]

This is going to happen over and over and over and over and over. It'll be a looooooooong time, if ever, before virtual currencies are protected in any meaningful way against this sort of thing.

Look at it this way: there are maybe a half-dozen people running a something-coin exchange, but there are essentially a limitless number of bad guys out there who, from the safety of their basements, can spend all the time in the world thinking up ways to crack your system. Sooner or later one of them s going to do it, and *boom*, away go the something-coins. And that's assuming that the something-coin exchange guys aren't themselves in on it or playing along. Or "go bad" later. Or get extorted, or find themselves in a jam and need some money ASAP. The attack surface is, in a word, enormous.

Yes, real banks get robbed, but that takes some real time and effort and most of the time the robbers get caught. In contrast, the risk-to-reward ratio for virtual currency is so unbalanced that it's a natural target with minimal risks. No bullets flying around, no get-away cars, no bank guards, no logistics about hauling the cash away, no dye-packets to worry about. It's like a crime made in heaven.

I don't have the answers (if there really are any) but you don't have to be a rocket scientist to see the problems inherent in virtual currencies. All of the people who lost money in this will, in all likelihood, never get a dime back. And worse yet, even the people who didn't lose money directly still take a hit when the currency undergoes devaluation because of the robbery. It seems like there are a LOT of risks and not many rewards.

I find the idea of virtual currencies interesting, but not mature or safe enough to put "real" money into any of them. Maybe someday, but not today...