Bitcoin Security Breach Causes Loss Of $2 Million

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Gatecoin, Hong Kong Digital Currency Company suffered breach on May 13 confirms Tehtri Security. In a major setback to the Bitcoin business, another breach occurred on May 9th, 2016 at the Bitcoin startup Gatecoin. The CEO of Gatecoin, Aurelien Menant, issued a statement that said that the loss was 250 BTC and 185,000 ETH. This amounted to 15% of their overall cryptocurrency deposit.

Tehtri Security, the cybersecurity firm, confirmed the breach. The breach was noticed when the server reboot caused a disruption of service. Gatecoin, meanwhile continued operations as usual until they noticed the breach on May 13. Thereupon, they suspended the operations and began investigations.

New location planned for higher security by Gatecoin

Gatecoin has taken the stance that client accounts that are segregated face minimum risk exposure. They have since issued the wallet addresses used to conduct the hacking operation for both Bitcoin and Ethereum cryptocurrencies. They will resume services once they become familiar with the modus-operandi of the hackers and determine new resolutions that are built on unbreakable parameters. This new location will be announced soon, according to the company spokesman.

Company to reimburse clients who lost money

Clients can withdraw the currencies held US dollars, Hong Kong Dollars and Euros after May 28th. The company is finding out new sources to cover its losses of the ETH and BTC. They plan to reimburse clients who lost money as quickly as they can. They expressed gratitude to the exchange community members who are helping to track the criminals who engineered the breach.

Attacker re-routes the currency

All the currency is stored in multi-signature vaults. The attacker cleverly diverted the deposits of ETH and Bitcoins from these cold wallets to a hot wallet. Gatecoin had placed a 5% limit for all transactions through hot wallets. When the attacker exceeded this limit, the company became aware of the breach.

History of breaches in Bitcoin

In June 2011, Allinvain lost 250,000 bitcoins, which at that time amounted to $500,000. Just about ten days later, Mt Gox suffered a hacking attack causing the value of the bitcoin to plummet to pennies level from its $32 mark. This made the investors lose confidence in bitcoin and the entire network remained under for 18 months.

Since then there have been more with Bitcoinica suffering two critical hacks resulting in the loss of thousands of bitcoins that made them fold up. The summer of 2012 also saw Picostocks, BIPS and several others like Flexcoin lose their business due to hackers.

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