Troubles Continue for BitPay in Wake Of Hack

BitPay, the Bitcoin payment processor, has endured a troublesome week. First, it was made public a hacker gained access to the CFO’s email account and coaxed the company into sending nearly $2 million. The company recently made major changes to its free plan, as well as apparently laid off numerous employees.

The company filed a lawsuit September 15 in Atlanta federal court claiming that, in December 2014, BitPay’s chief financial officer, Bryan Krohn, was tricked by a hacker into sending $1.8 million to a hacker.

“After capturing Mr. Krohn’s Bitpay credentials, the hacker used that information to hack into Mr. Krohn’s Bitpay email account to fraudulently cause a transfer of bitcoin” valued at $1,850,000, according to the lawsuit. Court documents show the transfer was for 5,000 bitcoins. The lawsuit can be seen here. The company ultimately blamed shortcomings in Bitcoin security: “… advances in bitcoin cybersecurity over the last year allow BitPay to further protect funds and better serve merchants and bitcoin users.”

After the hack became public, the company made changes to its payment plans. Although in July 2014 the company wrote a blog entitled, “BitPay’s New Plan: Free, Unlimited, Forever,” things will change. As the company e-mailed some merchants:

….we wanted to make you aware of the changes to our Free Plan.

On October 1st, all Free Plan accounts will be migrated to the Starter Plan, which offers free, instant conversion for 30 transactions per month. If you process more than 30 transactions, a 1% settlement fee will be applied to the additional transactions. The Starter Plan offers weekly settlements in USD and EUR, and daily settlements in BTC. Your processing tier will not be affected.

Further, although the company has not made any announcements, rumors have it that BitPay has laidoff much of its remaining staff.  If BitPay continues to be problematic, this could be a problem for Bitcoin, as BitPay is one of the leading companies onboarding new merchants to the decentralized digital currency.

Images from Bitpay and Shutterstock.