China-base bitcoin exchange BTER suspended operations this week after being hacked on Valentine’s Day.
BTER management revealed that the hacker stole 7170 bitcoins (BTC) from the exchange’s cold storage wallet. The amount is approximately equivalent to US$1.75 million.
The exchange is offering a 720 BTC bounty for assistance in recovering the funds but has released any information regarding the method of hacking.
The following message was on left on BTER’s website:
The transaction can be viewed at https://blockchain.info/tx/f5b0363f03e1ed8bb812c135361ea93590c831ce9f13a3750be1b93575baccc6
The Blockchain shows that the transaction was received on February 14th at 04:32:26
This is the second time in the New Year that there has been a serious hacking incident involving a bitcoin exchange. Slovenian bitcoin exchange Bitstamp lost about $5 million worth of bitcoins in January of a hacking incident, but only suspended services for a short time.
Only weeks ago, Hong Kong’s MyCoin shut its doors, resulting in investors losing a reported HKD 3 billion or approximately US$387 million. However, that incident had nothing to do with the security breaches of an exchange or wallets. It was an outright ponzi scheme.
The intriguing aspect of BTER hacking incident is that it is an example of another breach of a bitcoin cold or offline storage system. With cold storage widely thought to be the most secure way to hold digital currency, the hacking of BTER will likely cast doubt on the security of bitcoin storage in any format.
In response to the reoccurring security issues and fraud in cases like MyCoin, major bitcoin players in the bitcoin ecosystem are seeking validation by governments, when in the past they were wary of government involvement. Last month, leading bitcoin wallet company Coinbase launched America’s first regulated bitcoin exchange, with apparently various other exchanges queuing up to acquire accreditation.