The Bitcoinica Linode Theft and What it Means for Bitcoin
On March 1, web hosting provide Linode's servers were hacked, resulting in a theft of 3000 BTC from Slush and, most severely, 43000 BTC from Bitcoinica. There have been two major Bitcoin heists before, one 25000 BTC theft in June and a 17000 BTC theft from the Bitcoin exchange bitomat.pl in August, resulting in the exchange being bailed out and acquired....
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The last few days have unfortunately brought one piece of grim news after another to the Bitcoin community. As if the 43000 BTC Linode theft in March was not enough, another 18457 BTC was stolen from Bitcoinica's reserves, and Zhou Tong was barely able to prevent the thief from getting his hands on 30000 more. Unfortunately, given the financial stress that Bitcoinica was already in after the Linode theft two months ago, even this smaller loss turned out to be the straw that broke the camel's back. The site was immediately shut down for security reasons, and less than one day later Zhou....
This article was originally written on March 28, 2012. Following the recent Linode theft, in which over 43000 total bitcoins were stolen from Bitcoinica, MtGox enacted a new policy in an attempt to help stop the thief get away with his illicit gains: they began freezing accounts with bitcoins that could be traced back to the theft and demanding that they submit identification to regain access to their accounts. MtGox has admitted that they are cooperating with the Japanese CyberPolice in an attempt to determine the identity of the thief, and it is possible that their strategy will help....
Bitcoinica site as it looked in 2011. Grabbed from Wayback Machine. Did Bitcoinica founder Zhou Tong steal funds, return a part of them, then pay someone to keep it quiet? Well that would seem to be the impression created by the latest revelation contained in a Youtube video discussed on Reddit. Bitcoinica - Some Background. Zhou Tong founded Bitcoinica in 2011 at the age of 17. Bitcoinica was an online trading company that enabled users to speculate on contract-for-difference market against the Bitcoin to USD exchange rate. In March 2012, Bitcoinica reported that they had lost 43,554 BTC....
Bitcoinica has fallen far in these past four months. The margin trading service that was once hailed as a revolutionary margin trading service and a shining beacon of success in the Bitcoin economy has become a locus of scandals and thefts, as skilled online intruders continue to peck at the now defunct service's diminishing million-dollar supply of customers' funds and its operators continue to struggle to pay users even a 50% share of what they are owed. Bitcoinica's downfall started on March 1. Linode, a web hosting provider then used by Bitcoinica, Slush and the Bitcoin Faucet, was....
During the catastrophe of Mt. Gox, Zhou Tong and his Bitcoinica became a bit of an unproven scourge to the Bitcoin community. People were quite confident at the time that Tong had stolen funds on at least several occasions. A recent investigation further into the matter made it plain that something was going on, something very much unlike what Zhou Tong was claiming. Tong's Bitcoinica claimed to have lost 43,554 bitcoins as a result of hacking at Linode. They offered significantly little evidence to this effect, and were largely mysterious when queried for specifics. What came out in the....