$5 Million Stolen In Bitcoin Exchange Hack

January 7, 2015       Zach Halper      

Hackers have stolen what amounts to $5.2 million after an attack on Bitstamp, the largest exchange for bitcoins in Europe.

Bitstamp accounts were first compromised on January 4 with 19,000 bitcoins were stolen from customer’s accounts. The company shut down its services the next day as it made attempts to track down the hackers. In a statement, the company said that the breach represented a “small fraction” of Bitstamp’s total reserves, and that all balances held prior to the suspension in services would be repaid in full.

In an update posted this morning on its site, Bitstamp officials reported that it is currently attempting to transfer a secure backup of the Bitstamp site onto a new “safe environment” and will be bringing that server online in the next few days.

Bitcoin is a digital currency created in 2009 that has gained popularity over the years, even in the face of high profile hackings such as this one and the 2014 crash of Mt. Gox which was then the largest bitcoin exchange in the world. After an attack by hackers, it lost nearly $400 million in bitcoins, which have still not been recovered. Before this occurrence, prices for bitcoins topped $1,000.

Nonprofits have also been getting into the bitcoin game, the most recent being the BitGive Foundation, which last year claimed to be the first bitcoin-based organization to receive nonprofit status. A spokesman for the organization did not return messages seeking comment.

The most current Bitcoin Best Bid (BBB) rate, which is determined by consolidating the order books of all global exchanges, remained at $276.80 per bitcoin though other exchange rate prices have fallen in response to the Bitstamp hack. BBB was created by BitPay, a payment processing company for bitcoins. According to a statement posted on BitPay’s blog, the exchange rate remained steady at the time of the hack because Bitstamp’s exchange rate remained higher than other providers. Things changed, however, once it became clear Bitstamp’s reported price was no longer reflective of the market, and BitPay decided to temporarily remove Bitstamp from their exchange rate calculations.

“Our merchants experienced no interruption in service over this episode, and bitcoin customers continued to receive the most favorable price available globally,” wrote BitPay CFO Bryan Kohn.

A BitPay spokeswoman declined to comment further on the matter, pointing The NonProfit Times to their blog post.