[Infowarrior] - Bitcoin Heist Steals Millions from Exchange

[Richard Forno]

(c/o DG)

Bitcoin Heist Steals Millions from Exchange

Mathew J. Schwartz
Data Breach , Fraud

Cryptocurrency exchange Cryptsy, which trades bitcoins as well as more than 100 types of "altcoins" such as litecoin and namecoin, disclosed Jan. 15 that it was robbed in 2014. As a result of the breach, the exchange has now suspended all trades and says it will file for bankruptcy unless the stolen bitcoins are returned.

Florida-based Cryptsy says the attacker stole 13,000 bitcoins, worth $5 million today, as well as 300,000 litecoins, worth $970,000 today. The exchange says the theft was not related to the recent phishing and distributed denial-of-service attacks that it's suffered. It suspects that the most recent developer behind Lucky7Coin - LK7 - is the culprit behind the attacks, based on a backdoor that it found inside its network.

"About a year and a half ago, we were alerted ... [to] a reduction in our safe/cold wallet balances of bitcoin and litecoin, as well as a couple other smaller cryptocurrencies," Cryptsy says in a blog post. It says its investigation ultimately found that the developer of the Lucky7Coin cryptocurrency "had placed an IRC backdoor into the code of [its] wallet, which allowed it to act as a sort of a Trojan, or command-and-control unit."

The exchange adds: "This Trojan had likely been there for months before it was able to collect enough information to perform the attack," which was executed on July 29, 2014. A user of code-sharing site GitHub in March 2015 detailed that apparent backdoor in the Lucky7Coin IRC code, noting that it would give an attacker "the ability to run arbitrary commands on the victim's host."

Cryptsy suspects that whoever originally developed Lucky7Coin isn't responsible for the backdoor, but rather someone named "Jack," who claimed to have taken over development of the cryptocurrency codebase and related code, and who contacted Cryptsy on May 22, 2014. "You're the only exchange for this coin and I hope you will let me take care of it. I'm responsible," Jack claimed.

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http://www.databreachtoday.com/bitcoin-heist-steals-millions-from-exchange-a-8803

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