Follow Us

We use cookies to provide you with a better experience. If you continue to use this site, we'll assume you're happy with this. Alternatively, click here to find out how to manage these cookies

hide cookie message

Bitcoin startup BIPS loses $1 million after DDoS heist

More BTC for the vodka fund

Article comments

Attackers have managed to steal Bitcoins worth more than $1 million (1295 BTC) from Danish payments startup Bitcoin Payment Solutions (BIPS), the firm has admitted.

The apparently Russian-originated breach occurred between 15 and 17 November when BIPS was hit by DDoS attack which turned out to be a distraction designed to allow criminals to launch a separate raid on servers hosting consumer Bitcoin wallets.

“BIPS has been a target of a coordinated attack and subsequent security breached. Several consumer wallets have been compromised and BIPS will be contacting the affected users,” the firm said on 17 November.

The firm closed the wallet feature for consumers before noting, rather tactlessly, that it had not “been BIPS core business and as such regrettably affecting several users has not affected BIPS merchant acquiring.”

Making matters worse, the firm had to suspend its usual helpdesk pending a move to a separate host and asked affected users to contact it via email. This was only reinstated on 22 November.

This won’t come as much relief to the affected users who are now down an unknown portion of their Bitcoin stash. BIPS claims to have around 20,000 consumers of different types and is rated one of the largest Bitcoin operations in Europe. Given the emerging status of the currency, this probably isn't saying much.

“We will need their consent to hand over information to the authorities for further investigation, which hopefully can assist in catching the thief,” said BIPS founder and CEO, Kris Henriksen on a forum thread.

The firm has also yet to explain how the attack occurred, with Henriksen announcing that that “technical information will not be disclosed for security reasons.”

He further recommended that consumers abandon such Bitcoin storage systems completely and consider secure “cold storage.”

Needless to say, Bitcoin traders have been unimpressed by BIPS’ nonchalant attitude to their loss, with one user even threatening a lawsuit. But as a firm that launched as recently as March 2013, even without an action against it BIPS is unlikely to emerge with its reputation unscathed.

The whole affair has unsettling echoes of a similar attack on an Australian Bitcoin processor two weeks ago in which currency worth at the time around $1.3 million (£820,000) was lost.  

“Bitcoin, and similar operations such as Litecoin, are of particular interest to cybercriminals because they can be used to purchase real assets, not just virtual assets,” commented senior research fellow David Harley of security firm ESET.

“There are some attacks where your defences are only as good as your service providers’ security allows.”



Share:

More from Techworld

More relevant IT news

Comments

juanitarojas said: OH MY GLOB Are you telling me that humans and their inventions ARENT infalliblelsp mode offNEVER store your funds anywhere that is not under your exclusive control



Send to a friend

Email this article to a friend or colleague:

PLEASE NOTE: Your name is used only to let the recipient know who sent the story, and in case of transmission error. Both your name and the recipient's name and address will not be used for any other purpose.

Techworld White Papers

Choose – and Choose Wisely – the Right MSP for Your SMB

End users need a technology partner that provides transparency, enables productivity, delivers...

Download Whitepaper

10 Effective Habits of Indispensable IT Departments

It’s no secret that responsibilities are growing while budgets continue to shrink. Download this...

Download Whitepaper

Gartner Magic Quadrant for Enterprise Information Archiving

Enterprise information archiving is contributing to organisational needs for e-discovery and...

Download Whitepaper

Advancing the state of virtualised backups

Dell Software’s vRanger is a veteran of the virtualisation specific backup market. It was the...

Download Whitepaper

Techworld UK - Technology - Business

Innovation, productivity, agility and profit

Watch this on demand webinar which explores IT innovation, managed print services and business agility.

Techworld Mobile Site

Access Techworld's content on the move

Get the latest news, product reviews and downloads on your mobile device with Techworld's mobile site.

Find out more...

From Wow to How : Making mobile and cloud work for you

On demand Biztech Briefing - Learn how to effectively deliver mobile work styles and cloud services together.

Watch now...

Site Map

* *