Another Bitcoin Exchange, Another Heist

Attackers stole 76.69 Bitcoins, worth roughly $50,000, from the exchange Poloniex.

Further rattling consumers' faith in Bitcoin, attackers stole 76.69 Bitcoins, worth roughly $50,000, from the exchange Poloniex. The company made the news public on the Bitcoin Talk forum and said it will temporarily reduce all account balances by 12.3%, the overall amount stolen from the exchange.

"I take full responsibility for this and am committed to repaying the debt of BTC," Poloniex's owner, who goes by the moniker Busoni, wrote on the forum. "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%."

Busoni said Poloniex will record the amount deducted and pay back users once it's able to raise more capital, likely by increasing the exchange's fees. The company said hackers discovered a vulnerability by placing multiple withdrawals at once. Doing so meant Poloniex would process the transactions at the same time, which resulted in some negative account balances. Busoni said the exchange didn't have security features to prevent negative balances nor a system to queue and process transactions sequentially. Enacting new measures, he said the exchange will freeze withdrawals for accounts with negative balances and run audits to detect suspicious activity.

"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," he wrote.

[Image: Flickr user antanacoins]

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  • Bitcoin is an amazing concept and collection of processes. And while the current fiasco is unlikely to scare away cryptocurrency die hards, more security and safeguards for the exchanges are going to be needed before Bitcoin is ready for prime time. After all, for most people today, money at least feels safer as cash in a mattress than a string of random-looking numbers in a public and private key.

    • Michael Murphy, president and CEO, Skyscraper Inc.