News

Bitcoin ‘bank’ loses $1.3 million after mysterious hacking attack

The teenagedownload (4) owner of an Australian ‘bank’ that reported the theft of 4,100 Bitcoins (BTC), now worth $1.4 million Australian dollars,  has denied accusations that their loss was some kind of inside job.

Using the nickname ‘Tradefortress’ to protect his identity, the unnamed 18-year old told ABC News that hackers had broken into his site inputs.io on 23rd and 26th October and stolen the currency from his digital wallet in two chunks.

The site was no longer able to pay the balances to the BTC owners, a message on the site said although separate reports in the Australian media claim that input.io’s owner had originally planned to reimburse owners using his own Bitcoin holding.

“The attacker compromised the hosting account through compromising email accounts (some very old, and without phone numbers attached, so it was easy to reset). The attacker was able to bypass 2FA [two-factor authentication] due to a flaw on the server host side,” the message continued.

Anyone with an account holding more than one Bitcoin – worth US $347 each as of 8th November, an increase on their October valuation – should email the support address, it said.

According to the ABC interview, Tradefortress was not planning to report the theft to the police who would in any case struggle to investigate events for a currency that leaves no conventional audit trail.

If confirmed, Bitcoin sceptics will use the loss to point out the currency’s lack of regulation and traceability, which could leave it open to fraud. Bitcoin traders use digital banks to store Bitcoins on the understanding that they are more secure than an individual PC, another assumption that might need reappraisal.

Many see the rise of the currency as an intellectual game designed to test a number of hypotheses, including the possibility that machine-driven currencies with a pre-defined volume (the number of Bitcoins will never exceed 21 million) and no central control represent the future of money.

Equally, a currency needs trust and despite its surging price, Bitcoins lack mainstream acceptance. There is ample evidence that some of its popularity is down to the fact that it offers a way to launder criminal transactions to and from the world of ‘real’ money; the infamous Silk Road criminal market shut down by the FBI last month used Bitcoins as its currency.

Worse, there appears to be theoretical weaknesses in the process for generating the coins that could allow complex forms of fraud to develop.

A recent McAfee report predicted trouble for Bitcoins if criminality ends up co-opting the currency for its own uses.

 

Originally published on Techworld.com. Click here to read the original story. Reprinted with permission from IDG.net. Story copyright 2024 International Data Group. All rights reserved.
Previous ArticleNext Article

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

GET TAHAWULTECH.COM IN YOUR INBOX

The free newsletter covering the top industry headlines