Major Bitcoin Exchange Suspends Service, Suspecting Attack

Bitstamp suspends service, citing a wallet compromise, one day after a significant drop in the value of Bitcoins.

Sara Peters, Senior Editor

January 5, 2015

2 Min Read

In what they call an "excess of caution," Bitstamp, the world's second-largest Bitcoin exchange, suspended service today, pending investigation of a suspected compromise. However, some skeptics in the finance industry suggest that Bitstamp might just be temporarily shutting things down to insulate themselves from the effects of a significant drop in the price of Bitcoins Sunday.

Saturday's high of $314.77 fell to $260.84 late Sunday. That's more than $100 less than the price of Bitcoins was just one month prior: $369.15 on December 4.

As the Bitstamp home page currently reads:

"We have reason to believe that one of Bitstamp’s operational wallets was compromised on January 4th, 2015.

As a security precaution against compromises Bitstamp only maintains a small fraction of customer bitcoins in online systems. Bitstamp maintains more than enough offline reserves to cover the compromised bitcoins.



Jeffrey Robinson, author of BitCon: The Naked Truth about Bitcoin told CNBC, "Don't believe Bitstamp. It's a matter of liquidity... Who's next? It's as if Bitstamp realized they couldn't internalize the risk anymore so just decided, Let's suspend operations until everything settles down."

If we take Bitstamp at their word, this is just the latest in a string of attacks on Bitcoin exchanges, which peaked in February 2014, when Bitstamp, Mt. Gox, and BTC all fell victim.

At that time, in February, Bitstamp temporarily suspended processing of Bitcoin withdrawals, citing "inconsistent results reported by our bitcoin wallet, caused by a denial-of-service attack using transaction malleability to temporarily disrupt balance checking." Bitcoin exchange BTC suspended trading due to a DDOS attack. Most notably, Tokyo-based Bitcoin exchange Mt. Gox suspended its services February 10, reporting that 850,000 Bitcoins -- worth roughly $500 million at the time -- had been stolen. Mt. Gox filed for bankruptcy 18 days later.

Researchers have said that over 100 flavors of malware were stealing Bitcoins and other forms of cryptocurrency, via wallet-stealing and credential-stealing. In March, Android apps were discovered that contained malware designed to steal other cryptocurries less valuable than Bitcoins.

Bitcoin users have also been targeted directly, via phishing and other methods.

Some criminals, however, might not want to completely shut the exchanges down, because many ransomware operators request ransom payments be made in Bitcoins.

Bitstamp has not yet released any details about the compromise or any estimate about when the exchange will be up and running again.

About the Author(s)

Sara Peters

Senior Editor

Sara Peters is Senior Editor at Dark Reading and formerly the editor-in-chief of Enterprise Efficiency. Prior that she was senior editor for the Computer Security Institute, writing and speaking about virtualization, identity management, cybersecurity law, and a myriad of other topics. She authored the 2009 CSI Computer Crime and Security Survey and founded the CSI Working Group on Web Security Research Law -- a collaborative project that investigated the dichotomy between laws regulating software vulnerability disclosure and those regulating Web vulnerability disclosure.

Keep up with the latest cybersecurity threats, newly discovered vulnerabilities, data breach information, and emerging trends. Delivered daily or weekly right to your email inbox.

You May Also Like

More Insights