1295 BTC Stole from Danish Bitcoin Payment Processor BIPS

November 26, 2013

When Bitcoin’s popularity starts to sore, so do the security requirements for websites holding large amounts of Bitcoin.  Adding to the long list of Bitcoin payment processors and exchanges that have taken large hits is always an odious task.  On Novemeber 17, 2013 BIPS had  1,295 BTC stolen; the bitcoins are still being held by the attacker at this address: 1LuG91tcSQxKj32BsCoRkX7yQLfj9LtkCs.

Fortunately for BIPS users, merchant services were resumed 100% on Novemeber 22nd after internal investigations into the attack.    CEO Kris Henriksen has stated that merchants that had “auto-convert” to fiat were not effected at all.  However, BIPS has stated that under their privacy policy, they cannot reveal whom the funds were stolen from and is working with the individual affected merchants.  Despite BIPS actions, a lawsuit may still be in the works.  The attack actually occurred over two days with what seems to be a related attack two days before the bitcoins were actually stolen.

The anatomy of the attacks is beyond my skill to properly report; read the original story here.

This hacking of Bitcoins brings to mind many questions about Bitcoin security for newcomers to the Bitcoin sphere, undoubtedly.  I suppose it is worth repeating that the Bitcoin protocol, with the exception of a quickly remedied exploit many years ago, has never been compromised.  BIPS, like many before it, was attacked from a different vector essentially boiling down to a compromised email and password combination.  Bitcoin has power because it is a decentralized system, and the only person that has the ability to spend your coins, to trust them to another person, is you.  This puts more due diligence responsibility on the average person than is present in the rest of society.   Trusting your Bitcoin to an online service, no matter what their track record or security protocols are, is always a risk because there is now a centralized point of failure beyond your control.  BIPS users clearly see that now.

Have a cryptic day, mis amigos.

Last modified (UTC): December 19, 2013 21:44

Jesús Cripto

I am here to preach about Cryptocoins, the benefit of decentralized systems, and love for our crypto-brethren. If you like my writing and would like to donate XPM: Ab3suyYAjL5wZkix6598HEaEHNfxFVbX5h