20,000 Customers Affected as Bter Scrambles to Refund Stolen Bitcoin

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Bter announces plans to refund 20,000 affected customers.
Bter announces plans to refund 20,000 affected customers.

It has been a difficult month for Bitcoin exchange Bter. On February 14th, 2015, 7,170 BTC was stolen from the exchange. The company launched efforts to trace the stolen bitcoins which led them to the mixing service known as Bitcoin Fog. In an exclusive interview with CCN, Bter officials explained that about 20,000 users were affected by the heist.

The efforts at recovering the money from Bitcoin Fog have so far been unsuccessful. Bter has therefore opted to refund all of their clients who lost their bitcoins, a process that the company says will take up to two years to complete. To be able to manage the refund process, Bter has chosen to partner with Jua.com, a company that deals with wallet security and storage.

Bter’s Plans to Refund the Stolen Bitcoins

Bter is one of the larger bitcoin exchanges globally. The company has a total of 230,000 registered accounts, with over half of these accounts coming from China. On the company website, Bter shows that they are registered in the British Virgin Islands though the telephone contacts provided are for China. According to the press statement issued, Bter has been able to process transactions worth 890,000 bitcoins.

To further secure its bitcoins, Bter has in partnership with Jua.com introduced cold storage for their wallets. In addition, Jua.com will provide Bter a non-interest loan in exchange for equity. The initial amount that Jua.com is providing is 1,000 bitcoins though Bter explained that it would be seeking financing from additional sources as well. Other steps that the company will take to compensate its customers include waiving half of the annual trading fees proportionate to their loss.

Securing Bitcoins

Jua.com is a Bitcoin mining company based in China and boasts of having the largest mining pool in the world. According to information provided on the Bter website, the company claims to control about 20% of global hashing power.

Cases of bitcoins stolen from exchanges are on the rise. While it is necessary to continue giving companies the benefit of the doubt, discoveries in cases such as Mt. Gox, do little to inspire confidence in Bitcoin companies themselves. Going forward, it is going to become key for methods to be installed to guarantee the security of client funds, either from unscrupulous company officials or from hackers looking to steal bitcoin deposits.

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John Weru is a Kenya-born writer who has been writing since his teenage years. He believes that digital currencies hold the key to unlocking the potential of e-commerce and m-commerce globally, and powering Africa's participation in international trade.