$400 000 USD

DECEMBER 2012

POLAND

BITMARKET.EU

DESCRIPTION OF EVENTS

"Bitmarket.eu used to be a Bitcoin exchange run by two Polish developers. The developers, Maciej Trebacz and Pawel Makulski operated the exchange platform for about two years before it became a victim of a hacking incident." ... "As Trębacz explained on a BitcoinTalk forum post, BitMarket wasn't to blame for this incident. He says he decided to set up a Bitcoin hedge fund... using the services of Bitcoinica...Unfortunately, Bitcoinica itself got hacked in May 2012, losing all of BitMarket's funds along the way…” “The updates on Bitcoin Talk show that a significant number of Bitmarket.eu users received a portion of their funds back.”

One of the great concerns is these kinds of cascading failures, where one firm stores funds with another. This is precisely why a complex regulatory framework forcing a custodian model can increase risks of one failure cascading to another. Transparency about where funds are stored can alert traders to any potential risks. When this information is buried inside a complex legal framework and unavailable for the general public, it makes it impossible for useful decisions to be made.

Sources And Further Reading

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