AuthorTopic: Bitcoin Price Crashes After Bitfinex Admits Security Breach, $60 Million Stolen  (Read 756 times)

Offline Palloy

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- And it's gone.

http://zerohedge.com/news/2016-08-02/bitcoin-crashes-after-exchange-admits-security-breach
Bitcoin Price Crashes After Exchange Admits Security Breach, Over $60 Million Stolen
Tyler Durden
Aug 2, 2016

Bitcoin prices are crashing on extremely heavy volume  - down over 30% in the last 2 days - after Hong Kong-based Bitcoin exchange Bitfinex halted all trading after it discovered a security breach. As CryptoCoinsNews reports, the theft of 119,756 bitcoins has now been conclusively confirmed which makes it the largest theft in bitcoin’s space since MT Gox.

Representatives from the exchange told CoinDesk engineers were seeking to uncover issues at press time, though the company had confirmed roughly 120,000 BTC (more than $60m) has been stolen via social media.

Bitfinex statement:

    Today we discovered a security breach that requires us to halt all trading on Bitfinex, as well as halt all digital token deposits to and withdrawals from Bitfinex.

    We are investigating the breach to determine what happened, but we know that some of our users have had their bitcoins stolen. We are undertaking a review to determine which users have been affected by the breach. While we conduct this initial investigation and secure our environment, bitfinex.com will be taken down and the maintenance page will be left up.

    The theft is being reported to—and we are co-operating with—law enforcement.

    As we account for individualized customer losses, we may need to settle open margin positions, associated financing, and/or collateral affected by the breach. Any settlements will be at the current market prices as of 18:00 UTC. We are taking this necessary accounting step to normalize account balances with the objective of resuming operations. We will look at various options to address customer losses later in the investigation. While we are halting all operations at this time, we can confirm that the breach was limited to bitcoin wallets; the other digital tokens traded on Bitfinex are unaffected.

    We will post updates as and when appropriate on our status page (Bitfinex.statuspage.io) and on the maintenance page. We are deeply concerned about this issue and we are committing every resource to try to resolve it. We ask for the community’s patience as we unravel the causes and consequences of this breach.

The result appears to be broad-based selling across all major bitcoin exchanges...

 

The bulk of the selling occurred once the statement had been issued.

 

As CryptoCoinsNews adds, Bitfinex has, however, been experiencing numerous problems over the past few months, leading to an unexpected freezing of trading on at least two occasions, both of which caused a crash in bitcoin’s price by almost $100 in each instance.

Bitfinex was also fined by CFTC $75,000 “for offering illegal off-exchange financed retail commodity transactions and failing to register as a futures commission merchant,” in early June, but Zane Tackett, Director of Community and Product Development at Bitfinex, strongly denied any connection between previous outages and CFTC’s fine.
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Offline RE

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Why anyone thinks any of these blockchain digital currencies are the least bit "safe" or a good place to drop your "wealth" for safe keeping is utterly beyond me.

Lights go out. Oops.



RE
Save As Many As You Can

Online Surly1

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Why anyone thinks any of these blockchain digital currencies are the least bit "safe" or a good place to drop your "wealth" for safe keeping is utterly beyond me.

Lights go out. Oops.



RE

Fully agreed. And this is just one step ahead of the "cashless society," when your assets can be wiped out with a keystroke or a hack.
"It is difficult to write a paradiso when all the superficial indications are that you ought to write an apocalypse." -Ezra Pound

Offline jdwheeler42

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Why anyone thinks any of these blockchain digital currencies are the least bit "safe" or a good place to drop your "wealth" for safe keeping is utterly beyond me.
Why anyone who isn't laundering money thinks any of these blockchain digital currencies are the least bit "safe" or a good place to drop your "wealth" for safe keeping is utterly beyond me, too.  However, I think it's popularity can easily be explained by the people who ARE laundering money.
Making pigs fly is easy... that is, of course, after you have built the catapult....

Offline Eddie

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Bitcoin is a good way to speculate, so a lot of speculators are making bets on it. Reward is proportional to risk. There are macro drivers making Bitcoin go up. The current crash doesn't look catastrophic.
What makes the desert beautiful is that somewhere it hides a well.

Offline JRM

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The four most important words I ever heard on the topic of economics, wealth, riches ... are these.:

Wealth inheres in community.

To really understand what this means is to have the equivalent of a Ph.D. in the emerging new economics (or whatever it is which will eventually replace economics). 

Anything being called "wealth" which does not inhere in community will become increasingly fragile and ephemeral, at best.  And it won't be real wealth, anyway. It may be riches, instead. But riches have almost nothing to do with real wealth. The difference between real wealth and pseudo-wealth seems to me the kernel of wisdom which the world has been learning these last hundred years, with the lessons getting only stronger and bigger and ever more salient.  We are learning this collectively, but we don't collectively know it yet.  Pseudo-wealth has hollowed out our world ... such that everything rests (by way of analogy) on rotted out floor joists and pillars. For a moment, here and there, pseudo wealth is able to continue to masquerade as real wealth, and as durable.  But more and more we are all learning that pseudo wealth is like a movie set. The solid rock foundations are really a thin, painted veneer of Papier-mâché or Styrofoam. The seemingly solid brick and mortar and wood walls have nothing behind them....

True wealth cannot be stashed somewhere and kept and held. The days when that seemed to work are over.  Money is the epitome of fragility. Wealth inheres in community. 
My "avatar" graphic is Japanese calligraphy (shodō) forming the word shoshin, meaning "beginner's mind". --  http://en.wikipedia.org/wiki/Shoshin -- It is with shoshin that I am now and always "meeting my breath" for the first time. Try it!

Offline Palloy

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Given the many examples of hacks of major sites' login databases, and examples of the re-use of pathetic passwords on multiple accounts by people that should know better (like Zuckerberg), it is likely that unsophisticated users have reused pathetic passwords on their BitCoin wallets too. 

In that case, hackers could get someone's Facebook encrypted password, brute forced it quickly, and tried logging in to Bitfinex with those credentials, and when successful, emptied the accounts.

And given the hundreds of millions of Android phones that have been infected with malware, there would be millions of those with Facebook accounts and BitCoin wallets on them, and thousands with already cracked and published passwords.  So the only difference between the genuine and hacker transactions would be that the user claims they didn't make the transactions.

I was on a (dark) BitCoin discussion site after the Silk Road bust, where "drug dealers" were openly discussing how they had lost or been forced to abandon $25,000 accounts.  Very likely this was all bullshit, but it does highlight how difficult it must be to unscramble a broken anonymous accounting system, especially when most transactions are for illegal drugs using hacked smartphones.
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Offline Palloy

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http://bitfinex.statuspage.io/
Security Breach - Update
The Bitfinex Team
Aug 3, 23:29 UTC

We are currently in an ongoing process of restoring limited functionality in a secure environment, with full functionality coming afterwards in progressive stages. The first step is bringing the site online and allowing users to login and view the state of their accounts. Note that initially trading, deposits, withdrawals, and other core site functionality will be disabled.

To accommodate the relaunch, all withdrawals, open orders, and open funding offers will be canceled. Furthermore, in order to compute losses for relevant parties, settlement must occur in the affected accounts. Margin positions for all pairs will be settled and closed using the following prices, representing the midpoint of the bid and ask on August 2, 2016 at 18:00:00 UTC:

BTCUSD: 604.06000000
ETHUSD: 10.19050000
ETHBTC: 0.01689900
ETCUSD: 2.83700000
ETCBTC: 0.00471495
LTCUSD: 3.75180000
LTCBTC: 0.00621295

Further announcements about the next steps of the relaunch will be posted as progress is made. All significant changes to feature availability will be announced in advance. We will strive to keep you as informed as we can.


The State is a body of armed men

Offline Palloy

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Why would anyone want to stay with Bitfinex after this, or any other exchange come to that?  THEY lost the "money". THEY should be the ones going out of business.

http://zerohedge.com/news/2016-08-07/first-bitcoin-bail-all-bitfinex-users-lose-36-shared-loss-after-historic-hack
The First "Bitcoin Bail-In": All Bitfinex Users To Lose 36% In "Shared Loss" After Historic Hack
Tyler Durden
Aug 7, 2016

Last week's sharp, 30% plunge in the price of bitcoin (and its latest competitor, ether), after news hit that 119,756 bitcoins, or about $70 million, had been stolen from the Hong Kong-based bitcoin exchange Bitfinex, demonstrated once again the biggest risk with digital currencies: despite claims to the contrary, outside hacks remain a key threat and risk to anyone holding  (obviously, we use the term loosely) digital currencies.

Now, adding insult to injury for those who "held" their BTC at the hacked exchange, Bitfinex announced it would pull a page right out of Europe's bank resolution mechanism, saying that all of its users will lose 36% of their deposits after it concluded its review the massive hack, in what is set to be the first ever "bitcoin bail-in."

And, in pulling another page out of Europe, Bloomberg adds that to compensate its customers, Bitfinex users would receive (largely worthless) tokens that may later be redeemed or exchanged for shares in its parent company. Following the announcement, bitcoin climbed to $599 in early trading on Sunday. The virtual currency had dropped 12% to $577.23 in the week through Friday, its largest weekly decline since June, however has now recovered all of its sharp drop which had seen its price tumble as low as $470 on August 2.

“After much thought, analysis, and consultation, we have arrived at the conclusion that losses must be generalized across all accounts and assets,” the exchange wrote in a blog post on Saturday. “In place of the loss in each wallet, we are crediting a token labeled BFX to record each customer’s discrete losses.” Good luck monetizing said "token."

The blog post ended as follows:

    Thank you for your continued patience and for the many generous offers of support that we have received over the last several days. Notwithstanding this attack, we continue to believe in the possibilities associated with bitcoin. We will continue to update our customers and the public as and when we can.

According to Bloomberg, a representative of the exchange wrote on Reddit that the 36% loss “applies to all assets across the site, so everyone.” The exchange previously said losses would only apply to users who either had bitcoin deposited at the exchange or who were in the process of lending U.S. dollars for margin trading.

Following Tuesday's Bitfinex hack, the exchange closed down trading, withdrawals and deposits and said it was cooperating with law enforcement and would update the public after its investigation. In the latest blog post, it said it will reopen with limited functionality in the next day or two. Bitfinex was the largest exchange for U.S. dollar-denominated transactions over the past month, according to bitcoincharts.com.

As we predicted one year ago, the main reason for the surge in bitcoin has been the explosion of Chinese users of the virtual currency, who have rushed into bitcoin as one of the few remaining options to bypass Chinese capital controls on monetary outflows. As such the Bitfinex hack, impacting numerous Chinese participants, has not come as much of a surprise: what better way to limit trader euphoria for an asset that has soared nearly 200% in the past year than by "forcing" a loss of nearly a third on everyone involved.

It remains to be seen if this latest bail-in "glitch" will temper Chinese euphoria for the digital currency; considering the sharp rebound which has practically filled the entire hack "gap"...

... hackers will have to work overtime to temper the infamous Chinese enthusiasm for buying more of things that go from the lower left to the upper right.
The State is a body of armed men

 

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