BITCOIN, Heists, Thefts, Hacks, Scams, and Losses

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In summary: I don't know if this actually happened, but...?In summary, the website of major bitcoin exchange MtGox was offline Tuesday amid reports it suffered a debilitating theft. Around midmorning in the U.S., the company released a statement saying it had closed off transactions "to protect the site and our users." It offered no further details.
  • #1
nsaspook
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BITCOIN, “Heists, Thefts, Hacks, Scams, and Losses.”

http://www.npr.org/blogs/thetwo-way...-exchange-mt-gox-goes-dark-after-theft-report

"The website of major bitcoin exchange MtGox was offline Tuesday amid reports it suffered a debilitating theft, a new setback for efforts to gain legitimacy for the virtual currency," .

MtGox Issues Statement:

"In the event of recent news reports and the potential repercussions on MtGox's operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly."

Around midmorning in the U.S., the company released a statement saying it had closed off transactions "to protect the site and our users." It offered no further details.

At least with Zimbabwe 100 trillion dollar bills you had something to clean yourself with.
http://www.theblaze.com/wp-content/uploads/2011/01/trillion-620x362.jpg
 
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  • #2
http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html

Is this the mystery man?
In recent weeks, a revived version of Silk Road as well as one of Bitcoin's biggest exchanges, Tokyo-based Mt. Gox, shut down and filed for bankruptcy after attacks by hackers drained each of millions of dollars.

Andresen, a Silicon Valley refugee in Amherst, Mass., says he worked closely with the person "or entity" known as Satoshi Nakamoto on the development of Bitcoin from June 2010 to April 2011. This was before the rise of today's multibillion-dollar Bitcoin economy, boosted last year by the unexpected, if cautious, endorsement of outgoing Federal Reserve chair Ben Bernanke, who said virtual currencies "may hold long-term promise."

Or maybe not?
http://hosted.ap.org/dynamic/stories/U/US_BITCOIN_FOUNDER_DENIAL?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2014-03-06-19-35-06

LOS ANGELES (AP) -- The man Newsweek claims is the founder of Bitcoin denied he had anything to do with the digital currency.
 
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  • #3
http://www.washingtonpost.com/world/asia_pacific/ceo-of-bitcoin-exchange-found-dead-in-singapore/2014/03/06/7649bc60-a4f3-11e3-b865-38b254d92063_story.html?algtrack=cfrec-1&tid=btm_rex_2

A police spokesman said Thursday that initial investigations indicated there was no suspicion of “foul play” in the Feb. 26 death of 28-year-old Autumn Radtke, meaning officers do not suspect murder.

The spokesman said police found Radtke lying motionless near the apartment tower where she lived.

Police have so far classified the death as “unnatural,” which can mean an accident, misadventure, or suicide.
 
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  • #6
My interest on the subject is mainly in the efforts that people are using to steal the currency (it must represent something of value or people won't steal it) and the fallout. Bitcoin as a concept seems very solid but the cash interface seems to be run by some less than top notch people competing with criminals that seem to have actually been awake during lessons about transaction security if these are not inside jobs.
 
  • #7
http://www.itworld.com/it-management/408628/lost-translation-tangled-tale-mt-goxs-missing-millions

Spaghetti code

"The environment was completely dysfunctional," said the company source, who worked at Mt. Gox owner Tibanne. "There was no testing or staging of code. Just development and production. It's a financial exchange and they're handling customer money. At least I would expect a workflow that encompasses these things."

Mt. Gox management ignored warnings that the software platform was "a spaghetti code mess" and showed little interest in cracking down on security flaws, the source said, adding that Karpeles grew bored of run-of-the-mill business tasks.

"Mark loved to circumvent the (development) process because he had direct access to all the servers," the source said. "So whenever he wanted to change something he would just change it on the live side, and that was that."

The transaction malleability issue with the current Bitcoin core software requires exchanges be very careful with balances when dealing with in-house wallet or vault/escrow software.
http://webcache.googleusercontent.com/search?q=cache:xul7TjRvHZoJ:https://en.bitcoin.it/wiki/Transaction_Malleability+&cd=1&hl=en&ct=clnk&gl=us
 
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  • #8
nsaspook said:
http://www.itworld.com/it-management/408628/lost-translation-tangled-tale-mt-goxs-missing-millions



The transaction malleability issue with the current Bitcoin core software requires exchanges be very careful with balances when dealing with in-house wallet or vault/escrow software.
http://webcache.googleusercontent.com/search?q=cache:xul7TjRvHZoJ:https://en.bitcoin.it/wiki/Transaction_Malleability+&cd=1&hl=en&ct=clnk&gl=us

Yikes. People lost a *lot* of money due to them! Well...caveat emptor.
 
  • #9
lisab said:
Yikes. People lost a *lot* of money due to them! Well...caveat emptor.

Aside from the apparently snail-like pace of transferring bitcoin to other currencies (as reported in the media, I don't have any personal experience!) I wonder how much money some people made "for free", aribitraging Mt Gox's exchange rates against other exchanges. Something very strange started happening three weeks before Mt Gox closed down...

Of course foreign exchange traders try to do this all the time with "real" currencies, but not on the scale of "buy $1000 worth of bitcoins at Mt Gox, take them somewhere else, and sell them the same day for $2000".

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  • #11
What does that flatleak chart mean?

Right now it shows a constant stream of them flowing into China, from CNY. Like a hundred per minute.

Is somebody converting a lot of CNY's (chinese yuans?) into bitcoins?

OOps there just went one into US.

11:40 PM mountain time
 
  • #12
http://www.chron.com/news/texas/article/Japanese-bitcoin-exchange-files-US-bankruptcy-case-5304166.php

Japanese bitcoin exchange files US bankruptcy case
...
Although it's based in Tokyo, Mt. Gox is opening a U.S. bankruptcy case in an attempt to delay a recent federal lawsuit filed in Illinois on behalf of all U.S. residents burned by the exchange's demise.

The civil complaint brought against Mt. Gox by Illinois resident Gregory Greene alleges the exchange engaged in fraud and other misconduct. The suit is seeking to be certified as a class action that would represent all U.S. residents who had paid fees to Mt. Gox as part of a bitcoin trade or had their accounts frozen.

Steven Woodrow, a Denver attorney representing Greene, estimates hundreds of thousands of people could be represented in the case. In a Monday interview, Woodrow said he still intends to seek a federal court order that would freeze Mt. Gox's computers and other assets in the U.S. A hearing on Woodrow's request for the court order is scheduled for Tuesday in Chicago.
 
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  • #13
AlephZero said:
Aside from the apparently snail-like pace of transferring bitcoin to other currencies (as reported in the media, I don't have any personal experience!) I wonder how much money some people made "for free", aribitraging Mt Gox's exchange rates against other exchanges. Something very strange started happening three weeks before Mt Gox closed down...

Of course foreign exchange traders try to do this all the time with "real" currencies, but not on the scale of "buy $1000 worth of bitcoins at Mt Gox, take them somewhere else, and sell them the same day for $2000".

attachment.php?attachmentid=67429&d=1394335845.png

attachment.php?attachmentid=67428&d=1394335845.png

Wow that is very strange! The total volume is 928k, and the amount of Bitcoins that disappeared were 744k. Not wanting to start a conspiracy theory but that was a Bitcoin dumping that happened at Mt. Gox, someone really wanted to sell a lot of bitcoins fast :rolleyes:
 
  • #14
Tosh5457 said:
Wow that is very strange! The total volume is 928k, and the amount of Bitcoins that disappeared were 744k. Not wanting to start a conspiracy theory but that was a Bitcoin dumping that happened at Mt. Gox, someone really wanted to sell a lot of bitcoins fast :rolleyes:

Wow, you're right! Quick, someone call the Securities and Exchange Commission!

Oh. Wait.

Nevermind :biggrin:.
 
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  • #15
The 'social engineering' attack.
http://www.coindesk.com/canadian-bitcoin-exchange-lose-100000-in-attack/

Ontario-based bitcoin buying and selling service Canadian Bitcoins has revealed that it was the victim of an unusual attack last October that resulted in the loss of 149.94 BTC ($100,000).

The Ottawa Citizen reports that an unidentified scammer contacted a technical support agent at its now former web hosting service, Granite Networks, claiming to be owner James Grant. Using only the owner’s name, the thief was allegedly able to have the site reboot into recovery mode, allowing him to bypass all protections on the server.
 
  • #16
https://vircurex.com/welcome/ann_reserved.html

Frozen Funds

In preparation of the following, we have with immediate effect stopped the possibilities to withdraw BTC, LTC, FTC and TRC. All incoming deposits will also not be credited to the users accounts for the time being.

On 24th March 2014 we will be freezing the current BTC, LTC, TRC and FTC accounts, then perform the below distribution of the available coins and reenable deposits and withdrawals. This action will also require us to delete all open sell orders for BTC, LTC, FTC and TRC.

As you may very well be aware, we had two incidents last year that lead to a loss of a significant number of BTC, LTC, FTC, TRC. We had communicated at that time that we will be covering those losses from our income, which we have done so far. We had enough coin balances in our cold wallet to upkeep our platform and the positive cashflow enabled us to gradually refill the wallets.

Unfortunately we had large fund withdrawals in the last weeks which have lead to a complete depletion of our cold wallet balance and we are now facing the option of either closing the site with significant unrecoverable losses for all or to work out a solution that allows the exchange to continue to operate and gradually pay back the losses.
 
  • #17
I take litecoin and bitcoin business like a poker game. Quit while you're ahead, which I did :)
 
  • #18
And the beat goes on...people getting mugged.

http://www.coindesk.com/coinex-pw-hacked-will-cover-losses/
CoinEX.pw has confirmed it recently suffered a hack resulting in the theft of all the bitcoins in its possession.

http://www.cryptocoinsnews.com/2014/03/25/cryptorush-loses-millions-of-blackcoins/
So what does this mean for CryptoRush and their Blackcoin market? The market is closed until further notice. There is a loss of 1554503.10052230, 121.xx Bitcoins at the time of writing. It was taken by users who exploited the bug, knowing they could withdraw more than they owned. Some users contacted the exchange to tell them they were able to do this.
 
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  • #19
http://cyprus-mail.com/2014/04/04/police-probe-claims-of-bitcoin-fraud/
POLICE are looking into allegations that Cyprus-based bitcoin marketers Neo & Bee have defrauded at least two customers, as the company’s CEO continues to be missing in action.
Two persons have filed complaints to the police alleging they paid the company cash, but have not received bitcoins in exchange. The complaints were filed four or five days ago, a police spokesman said.
...
No one is certain of Brewster’s whereabouts. The company’s swanky head office in Nicosia was all but deserted yesterday.
A company member there told the Mail that all employees had quit, and confirmed press reports that staff were not paid their March wages.
“No one’s in charge here…we’re clearing out,” said the employee, who requested anonymity.
The source said they got word from Brewster on March 19 that he had gone abroad to raise capital, but didn’t hear from him since.
...
March 28th, 2014 - March 28, 2014
FOR IMMEDIATE RELEASE:
Havelock Investments has been formally informed by the Pass-Through Fund Manager of NEOBEE that the compliance officer of Neo and Bee Ltd has stated that due to an increase of abnormal activity on the LMB share platform, there may be a high possibility of questionable trading activity. While Neo and Bee Ltd investigate the issue further they have strongly recommended that we halt trading and transfers.
Havelock Investments has halted the NEOBEE fund and is awaiting further instructions from the issuer.
 
  • #20
http://arstechnica.com/tech-policy/...-smell-of-fraud-from-one-bitcoin-miner-maker/

The Probation Office has been notified by the US Postal Inspection Service that hundreds of complaints have been filed against BFL from individuals who have placed pre-orders for hardware from BFL.

The seriousness of Vleisides' instant offense [the lottery scam], coupled with his current involvement in a somewhat similar business enterprise are cause for concern.
 
  • #21
This looks like a inside job somewhere but was pretty slick. They hijacked the miners paychecks.
http://www.secureworks.com/cyber-threat-intelligence/threats/bgp-hijacking-for-cryptocurrency-profit/

The Dell SecureWorks Counter Threat Unit™ (CTU) research team discovered an unknown entity repeatedly hijacking networks belonging to Amazon, Digital Ocean, OVH, and other large hosting companies between February and May 2014. In total, CTU researchers documented 51 compromised networks from 19 different Internet service providers (ISPs). The hijacker redirected cryptocurrency miners' connections to a hijacker-controlled mining pool and collected the miners' profit, earning an estimated $83,000 in slightly more than four months.
 
  • #22
http://www.coindesk.com/bter-nxt-bitcoin-exchange-hack/

BTER is reporting that 50m NXT, or roughly $1.65m at press time, has been stolen from its exchange following an attack on one of its hosting servers.

A developer representing the China-based digital currency exchange platform confirmed the news on the community information website NXT Forum, suggesting that the BTER team was considering urging the NXT community to roll back the NXT block chain to recover the lost funds.

Cause: Sloppy security practices
Solution in this case: Paying off the hacker pay in Bitcoin
 
  • #23
http://www.coindesk.com/bitcoin-trader-customer-losses-management-disappearance/
A popular bitcoin arbitrage service has collapsed, resulting in the loss of customer funds and the dissolution of a company that had a notable presence in the industry.
http://www.zdnet.com/why-i-almost-b...ught-into-the-butterfly-labs-scam-7000034201/
But now, after the disclosure by the U.S. Federal Trade Commission that Butterfly Labs was pretty much running a scam operation, I'm very glad I have good Spidey sense.

Not only does the FTC have a bunch of complaints about Butterfly Labs, but their specific complaint that they used customer orders to mine bitcoins hits close to my spreadsheet calculations.

This is actually pretty big, because if the FTC allegations are true, Butterfly Labs effectively sucked all the value out of their hardware (on their customers' dime), before shipping the hardware to the customers.

https://www.cryptocoinsnews.com/mintpals-3700-stolen-bitcoin-likely-in-hands-of-alleged-scammer-alex-green/
MintPal promised that withdrawals would process over time, but complaints surfaced that consumers were not receiving their bitcoins. Blaming it on faulty daemons, MintPal bought more time to hold onto the stolen property by possibly tricking consumers.
Now, it’s public knowledge that the accused scammer Alex Green may hold 3700 stolen bitcoins, $1,480,000, from the exchange in his personal wallet. The coins are narrowed down to exist in this wallet. However, Green quickly took the podium to announce that he is Ryan Kennedy, and the coins quickly moved afterwards.
 
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  • #24
http://www.bloombergview.com/articles/2014-12-23/and-2014s-worst-currency-wasbitcoin
Bitcoin is second only to gold on the list of topics guaranteed to arouse the wrath of the Internet trolls. Yet relentless promotion can't hide these facts: The digital currency peaked at a value of $1,130 just over a year ago. Its plunge of more than 56 percent in 2014 makes it the world's worst performing currency this year, according to Bloomberg, which tracks 175 foreign-exchange values:

I did miss a investment opportunity this year.
(For the sake of completeness, Somalia's shilling is the world's best performer this year, gaining more than 55 percent against the dollar. Yes, that's crisis-torn Somalia, although the gains seem to have more to do with expatriates sending gobs of money home than anything fundamental in the domestic economy, and are a repeat of the shilling's 2013 performance against its foreign-exchange peers.)
 
  • #25
Back to the heist that started this thread.

http://www.itworld.com/article/2864...ud-took-most-of-mt-goxs-missing-bitcoins.html
Nearly all of the roughly US$370 million in bitcoin that disappeared in the February 2014 collapse of Mt. Gox probably vanished due to fraudulent transactions, with only 1 percent taken by hackers, according to a report in Japan’s Yomiuri Shimbun newspaper, citing sources close to a Tokyo police probe.
 
  • #27
In a year, these heists, thefts, hacks and scams will be rendered moot and the losses will be the same with or without them due to the crash in value. Yes, I'm sure some people lost some real money, but overall most of the losses are meaningless because the money never was anything more real than monopoly money to begin with.
 
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  • #28
russ_watters said:
In a year, these heists, thefts, hacks and scams will be rendered moot and the losses will be the same with or without them due to the crash in value. Yes, I'm sure some people lost some real money, but overall most of the losses are meaningless because the money never was anything more real than monopoly money to begin with.

At least they had some fun before losing the money to a classic scam.
 
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  • #29
When thousands or millions agree to work and trade for monopoly money, I wouldn't call it meaningless.
 
  • #30
http://www.coindesk.com/bter-bitcoin-stolen-cold-wallet-hack/
The stolen funds were broadcast through this transaction, according to the announcement, and the bitcoins appear to have been split into a number of separate wallets since the alleged intrusion.

The incident comes months after BTER suffered a hack on its servers, during which 50m NXT, worth roughly $1.65m at then-current prices, were stolen. At the time, the exchange was reportedly able to negotiate for a partial return of those funds.
 
  • #31
The thing I find weird about all these electronic money systems such as Bitcoin and others start ups who want to make a buck, is that while hyperbolizing it as the way of the future cashless society, the value is still referenced to the old clunky central banking system. Seems schizophrenic to be saying that it curtails and protects you from government interference, and yet encourages users to jump into and enjoy the experience of being taken for a ride on speculation and shady dealers.

At present, the speculation is all a wild west endeavour, and if and when it does become mainstream, expect government controls to be implemented, most likely at users request.
 
  • #32
The beat goes on.
https://exco.in/
February 6th and 10th, the user 'Ambiorx' was able to gain access to all the Bitcoins on the Exco.in exchange. As a result we no longer have the means necessary to continue operation and are deeply saddened to announce we will be shutting down operations this month. The trading engine has been disabled and Exco.in user accounts will remain active, with the exception of Ambiorx's account and those who may be affiliated.
 
  • #33
nsaspook said:
The beat goes on.
https://exco.in/
Ouch:
We noticed the hot wallets dwindling but assuming it was members moving their funds off site during the DDOS, we loaded all the cold balances onto the site so that users would not have withdrawals interrupted during our periods of up time.This fatal mistake allowed Ambiorx to continue to drain the site.
 
  • #35
russ_watters said:
Ouch:

Inside job or total stupidity to keep refilling the 'cash' drawers from the safe while the 'bank' is being robbed.
 
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