More Bitcoin Banks Fall to Hacker Attacks

Every day it seems like we’re writing another story about a Bitcoin bank being broken into, and every day investors lose that much more confidence in a currency which was once heralded as the “end of classical finance as we know it”.

This week, the owner and proprietor of the Bitcoin exchange Poloniex informed users that his marketplace had been hacked, and that although the hole had since been patched, those behind the attack were able to make off with more than he would have hoped for by the time the exploit was discovered.

Thankfully this time around the haul was relatively small, and shouldn’t have an effect on the already tanking market price of Bitcoin which has spent the past several tumultuous months in freefall after the announcement of MtGox’s insolvency.

Photo: Atana / Flickr

Photo: Atana / Flickr

By exploiting a hole in the code which processed transactions in bulk rather than on an individual basis, the unnamed hacker was able to sneak in code that dumped 76.69 Bitcoins (about $50,000 at current going rates) into an anonymous wallet before anyone at Poloniex was able to detect the crack and respond accordingly.

Unfortunately, the owner of the exchange has informed his customers that the bill would be paid out of their pockets, as neither he or his company had the means to cover the loss on their own.

“Because there is not enough BTC to cover everyone’s balances, all balances will temporarily be deducted by 12.3%. Please understand that this is an absolute necessity—if I did not make this adjustment, people would most likely withdraw all their BTC as soon as possible in order to make sure they weren’t left in that remaining 12.3%. If I had the money to cover the entire debt right now, I would cover it in a heartbeat. I simply don’t, and I can’t just pull it out of thin air.”