$228 000 USD

MARCH 2012

NEW ZEALAND

BITCOINICA

DESCRIPTION OF EVENTS

"Online bandits made off with at least $228,000 worth of the virtual currency known as Bitcoin after exploiting a vulnerability in a widely used Webhost that gave unfettered access to eight victims' digital wallets." “On March 2, 2012, a hacker was able to obtain customer support privileges for Linode, giving the hacker a unique level of access to customer information. The hacker was able to find out which customers were holding bitcoin wallets. Using that information, the thief logged into individual accounts using a weakness in the Linode manager, a platform customers were using to configure their virtual machines. The hacker rebooted the virtual machines to change the root passwords, giving the hacker access to any account and the bitcoins inside. A total of 46,703 BTC was stolen, worth $228,000 at the time.”

In the early days of bitcoin, security was often a secondary concern. Many people stored wallets online and accessible, including the cryptocurrency exchange Bitcoinica. These types of exploits are easy to avoid by using proper multi-signature cold storage.

HOW COULD THIS HAVE BEEN PREVENTED?

This is a case where simply knowing who's holding the funds and storing them properly offline with multiple signatures would have avoided the issues.

 

Check Our Framework For Safe Secure Exchange Platforms

Sources And Further Reading

 For questions or enquiries, email info@quadrigainitiative.com.

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