Bitcoin flattened by sell-and-buy theft

Bitcoin, is a great idea. The digital currency threatens to undermine traditional banks - and those thieving scoundrels deserve to have their hand-stitched rugs pulled from beneath their feet.

Now we learn that the main Bitcoin exchange, Mt. Gox, suffered a database breach in which a system auditor who had read-only access to the database had their computer compromised. The infiltrator - who was using a Hong Kong-based IP address - cleaned out one big account and flogged its contents, buying them back directly after he'd effectively crashed the currency to cut the Coin's notional value from over $17 to less than a single cent. Unfortunatley for the rogue trader there was a $1000 per day withdrawal limit on the account so s/he could only get out with $1000 worth of coins.

The sale of the coins took place overnight and was captured on video here.

Mt. Gox said it was investigating the incident and was working on various fixes. "The Bitcoin will be back to around 17.5$/BTC after we roll back all trades that have happened after the huge Bitcoin sale that happened on June 20th near 3:00am (JST)," the outfit said.

Apart from the single hack, "no account was compromised, and nothing was lost," the statement continues. "Due to the large impact this had on the Bitcoin market, we will roll back every trade which happened since the big sale, and ensure this account is secure before opening access again."

Bitcoin is a peer-to-peer currency, which means that no central authority issues new money or tracks transactions. According to Bitcoin, these tasks are managed collectively by the network. The real problem for the established (thieving) financial institutions is that, should the currency really take off on the web, it could become the only 'money' you'll ever need. This has put the willies up them big time. Could this explain this attack and the previous theft of some $500,000-worth of coinage? Undoubtedly.

The outfit might want to consider using LulzSec to secure its servers!