Mt Gox exchange ‘disappears’ amid rumors of $350m Bitcoin heist – biggest in history

Cybercrime

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Trading has been suspended on the Bitcoin exchange Mt Gox and its website has closed, amid rumors that the exchange has lost 744,000 Bitcoins in an online theft – worth around $350 million at Monday’s trading prices, according to Wired. If true, it would be the largest Bitcoin theft in a series of heists which have hit the troubled currency this year.

The company’s website is offline, its founder has vanished, and staff are not answering calls, according to Reuters.

Wired reports that the company may have fallen victim to a prolonged hacker attack, quoting a document by Bitcoin entrepreneur Ryan Selkis, which claims that the exchange is insolvent after a months-long hack, and says, ““The reality is that Mt. Gox can go bankrupt at any moment, and certainly deserves to as a company.” Wired was unable to confirm the report, and says that no spokesman for the company was available to comment.

The document, entitled MtGox Situation: Crisis Strategy Draft, has circulated widely on the internet, and appears to be an internal document, outlining strategies available to the company.  “The current situation will negatively impact everyone who owns or operates in Bitcoin,” it says, blaming, “massive robbery and poor Bitcoin accounting.”

The company’s website was taken offline at noon Tokyo time, shortly after a statement was published online by digital wallet company Coinbase, denouncing Mt Gox, and endorsed by other leading Bitcoin exchanges, according to the FT’s report.

Coinbase said, “ As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today.  Mtgox has confirmed its issues in private discussions with other members of the bitcoin community.”

News agency Reuters described the exchange – once the world’s largest – as having an empty office, bar protesters angry that they had lost money after investing.

Rumors had circulated that the company faced insolvency after it halted withdrawals earlier this year, according to Bloomberg Businessweek. The company had halted withdrawals after what it described as ‘unusual activity’.

Veteran security researcher and writer Graham Cluley says, “What a colossal mess.  According to some reports, 6% of Bitcoins in circulation have been stolen. These latest developments will send shockwaves through the Bitcoin world, and it remains to be seen if long term confidence in crypto currencies will be damaged.”

If the rumor of a ‘heist’ is true, it’s one of a series to hit Bitcoin sites, including high-profile ‘dark markets’. As reported by We Live Security, a large scale cyber-theft this month drained the relaunched ‘online drug bazaar’ Silk Road 2.0 of nearly all of its Bitcoin reserves – estimated to be worth several million dollars. Site administrators blamed an insider, who used a recently discovered flaw to withdraw money repeatedly, before vanishing.

Forbes Magazine said that it was the latest in a series of hacks targeting ‘black market’ sites – and that of the half-dozen sites which sprung up in the wake of the closure of the original Silk Road, three shut down after insiders ran off with funds, and two after being hacked. Silk Road 2.0’s latest mishap was also due to an insider, the site admin believes.

Author Rob Waugh, We Live Security

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