Bitcoin market hacked, crashes to below $0.01 per bitcoin

Bitcoin, the digital currency that some people have called "dangerous", has just had a major setback today thanks to a significant data breach.

The main Bitcoin exchange, Mt. Gox, has suffered a major database breach which caused one account in particular to be completely compromised and have its funds stolen. The real implication of this was the effect it had on the Bitcoin market - this video shows the market in real time dropping to values below 1 cent in a matter of minutes as people frantically try to remove their funds. Due to the significance of this hack, the entire Bitcoin market is being reset. This is what Mt. Gox had to say -

"The bitcoin will be back to around 17.5$/BTC after we rollback all trades that have happened after the huge Bitcoin sale that happened on June 20th near 3:00am (JST).

One account with a lot of coins was compromised and whoever stole it (using a HK based IP to login) first sold all the coins in there, to buy those again just after, and then tried to withdraw the coins. The $1000/day withdraw limit was active for this account and the hacker could only get out with $1000 worth of coins.

Apart from this no account was compromised, and nothing was lost. Due to the large impact this had on the Bitcoin market, we will rollback every trade which happened since the big sale, and ensure this account is secure before opening access again.

UPDATE REGARDING LEAKED ACCOUNT INFORMATIONS

We will address this issue too and prevent logins from each users. Leaked information includes username, email and hashed password, which does not allow anyone to get to the actual password, should it be complex enough. If you used a simple password you will not be able to login on Mt.Gox until you change your password to something more secure. If you used the same password on different places, it is recommended to change it as soon as possible.

SERVICE RETURN

Service will not be back before June 20th 11:00am (JST, 02:00am GMT). This may be delayed depending on what is found during the investigation."

Additionally, an email is being sent out to all Mt. Gox users informing them of their passwords being reset -

"Our database has been compromised, including your email. We are working on a
quick resolution and to begin with, your password has been disabled as a
security measure (and you will need to reset it to login again on Mt.Gox).

If you were using the same password on Mt.Gox and other places (email, etc),
you should change this password as soon as possible."

This could well be a significant setback for the digital currency, which was previous seen as a secure, anonymous way to manage funds. Will people still trust the service after this? Only time will tell. Once the market comes back online in a few hours, don't be surprised if the currency drops in value once more. Once again, as with any hack of this nature, if you used the service then it is highly recommended that you dump whatever password you used and never use it again.

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27 Comments

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Again we have the people with mental problems posting here who support this hacking crap, and think this is funny. Let me guess, you belong to the hack group that did this.

Seems the ignorant out number the enlightened people on here... (nothing new there)!

When those pieces of paper you hold so dear to you,suddenly become worthless (even more than they are now),what will you do then...? Oh yeah,run to your government looking for help.

Good luck with that.

RagBacker said,
Seems the ignorant out number the enlightened people on here...

Hi...you must be new to planet Earth. Welcome to what we call Society, where this has been fact for years now.

I had an account with them Never used bitcoins but I guess I should change my passwords....since I can't remember what password I used on that stupid site

Rudy said,
I had an account with them Never used bitcoins but I guess I should change my passwords....since I can't remember what password I used on that stupid site

Haha... Ask Lulzsec to find it for you ;}

Lulzsec uses Bitcoin to accept donations anonymously.. I know it wouldn't make sense to attack their primary source of funds, but I can't help but wonder if they're responsible for this.

Bitcoins are a speculator's wet dream. If not for the 1000$ daily limit, someone could have made a fortune by shorting them in the wake of these news.

I think it's interesting that the hack occurs, some tool goes out and trades a bunch of coins around which almost sounds like he was doing short sells, the market crashes as people go in and withdraw their money in a panic. Remarkable how fast those people figured out what was going on and collectively withdrew their money over a span of a several minutes (as shown in the video). I'm like, WTF? Was damn nearly every bitcoin user on at the same time and heard the news at the same time?!?

One thing to remember is this was just one trading site. The bitcoin network itself was not hacked.

This whole situation was isolated and the transactions being rolled back aren't real bitcoin transactions just MtGox's transactions. Meaning only $1,000 worth of bitcoin was actually stolen as all of the internal transactions can be reversed and fixed.

There are other trading sites out there people are still using.

Chad Moran said,
One thing to remember is this was just one trading site. The bitcoin network itself was not hacked.

This whole situation was isolated and the transactions being rolled back aren't real bitcoin transactions just MtGox's transactions. Meaning only $1,000 worth of bitcoin was actually stolen as all of the internal transactions can be reversed and fixed.

There are other trading sites out there people are still using.

Another thing to remember is that an account has been breach and $500,000 were stolen without any way to trace the money, and there is a Trojan targeting bitcoin wallets :
http://www.neowin.net/forum/to...ling-bitcoin-users-wallets/

Lol man I researched it in 100 ways to try to justify this as a secure non-ponzi money system... I couldn't justify it!

NyaR said,
Lol man I researched it in 100 ways to try to justify this as a secure non-ponzi money system..I couldn't justify it!

The important thing to remember is that bitcoin itself wasn't hacked, but rather a website that contained people's account data was. It's a bit like your bank branch being hacked, not the banking system.

NyaR said,
Lol man I researched it in 100 ways to try to justify this as a secure non-ponzi money system... I couldn't justify it!

To be honest, there's no point in using it unless you need to make an anonymous transaction. Which is why it's useful for buying stuff off silk road

Nihilus said,

To be honest, there's no point in using it unless you need to make an anonymous transaction. Which is why it's useful for buying stuff off silk road

it can be traced, your not as anonymous as you think.

Jme621 said,
it can be traced, your not as anonymous as you think.

It can be traced, with extreme difficulty. As in you'd need to track down person after person and make them tell you who the next link in the chain is until you had the transaction you wanted. That's not really feasible.

The only other method I'm aware of is if you fail to use a VPN, ToR or webwallet etc.

Einlander said,

I agree, people like Caleo are why we can't have nice things.

You call "nice things" the digital currency? The economical banking system is already a great deception. Could you imagine with a fully digital economical system what those bankers would be able to do? Probably you can't because ordinary people like me and possibly you, we aren't able to indulge as deep.

Edited by Deo Domuique, Jun 19 2011, 10:32pm :

Deo Domuique said,

You call "nice things" the digital currency? The economical banking system is already a great deception. Could you imagine with a fully digital economical system what those bunkers would be able to do? Propably you can't because ordinary people like me and possibly you, we aren't able to indulge as deep.

Note that you can track every cent of bitcoin so their is full accountability. The bankers can't hide anything from you.

Caleo said,
All I have to say is..

Hahahahahahahahahahahahahahahahahahahahahahaha.

+1

People will be people yet the supporters of Bitcoin thought their virtual currency could change that. oh well.. some people will NEVER learn.

Laughing right with you there buddy

Deo Domuique said,
You call "nice things" the digital currency? The economical banking system is already a great deception. Could you imagine with a fully digital economical system what those bankers would be able to do? Probably you can't because ordinary people like me and possibly you, we aren't able to indulge as deep.

Zeitgeist movement ftw!

Open your eyes people, man wasn't meant to live this way.