Bitcoin Heist Steals Millions, Hack Shuts Down Silk Road And MtGox

Bitcoin Heist Steals Millions, Shuts Down Silk Road And MtGox

A Bitcoin heist by hackers managed steal $350 million of the virtual currency and the Mt. Gox Bitcoin exchange was forced to shut down for a time. Because of these well-publicized thefts the Bitcoin price has been plummeting even further.

In a related report by The Inquisitr, a recent Bitcoin crash in value on the exchanges had some people questioning exactly what their virtual money might be worth, if anything. This past summer, the SEC also was investigating millions of dollars in Bitcoin fraud and the Senate was considering whether Bitcoin was legitimate in the first place.

Hackers have been using botnets to infect computers in order to pull off their Bitcoin heist. For example, one group operated what’s called the Pony botnet and stole the login and email credentials for over 700,000 users. But it wasn’t just a Bitcoin heist, other virtual currencies like LiteCoin, FeatherCoin, and 27 others were affected by the hack.

The security firm Trustwave says the Bitcoin heist was possible precisely because of the nature of the virtual currency:

“Bitcoins are stored in virtual wallets, which are essentially pairs of private and public keys. Stealing Bitcoins and exchanging them for another currency, even a regulated one such as US dollars, is much easier than stealing money from a bank.”

But the Pony botnet was actually almost small change compared to another recent Bitcoin heist. While those hackers ran off with $220,000, another more recent attack is believed to have stolen 744,408 Bitcoins from MtGox. This would account for around six percent of all Bitcoins mined into existence and is worth about $350 million depending on the Bictoin price at the moment. Some experts claim “Gox is the worst-run business in the history of the world” and another document says, “The reality is that Mt. Gox can go bankrupt at any moment, and certainly deserves to as a company.”

But this is not the only Bitcoin heist to make the news in recent weeks. Silk Road was famously shut down by the FBI last year and they seized $3.5 million. But last week a Silk Road hack is claimed to be responsible for $2.7 million going missing.

Bitcoin wallet-makers Coinbase and Blockchain say the MtGox Bitcoin heist should dissuade people from using other exchanges:

“This tragic violation of the trust of users of Mt. Gox was the result of one company’s abhorrent actions and does not reflect the resilience or value of bitcoin and the digital currency industry. There are hundreds of trustworthy and responsible companies involved in bitcoin.”

Regardless of these assurances, the Bitcoin price dropped hard yesterday, reaching a low of around $418 on Monday. Users on MtGox were reportedly dumping their Bitcoins for less than $200 because no one was sure if wallets on the exchange would suddenly become worthless.

Do you think the Bitcoin heist shows that virtual currencies cannot be trusted?