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Silk Road successor robbed of $2.6m worth of Bitcoins

BusinessNews
by Jamie Hinks
, 14 Feb 2014News
Silk Road successor robbed of $2.6m worth of Bitcoins

Hackers have stolen $2.6 million [£1.5 million] worth of Bitcoin currency from Silk Road’s successor Defcon in a case that could cast new doubts on the reliability of the popular virtual currency.

Related: Bitcoin exchange hit by cyber attack shuts down temporarily

The marketplace, which was set up by one of the anonymous administrators of Silk Road, confirmed via a Reddit post that the site’s escrow account had been compromised and it’s estimated that 4,400 Bitcoins have been stolen.

“Our initial investigations indicate that a vendor exploited a recently discovered vulnerability in the Bitcoin protocol known as "transaction malleability" to repeatedly withdraw coins from our system until it was completely empty,” stated the post.

The rough estimate of how many Bitcoins were stolen comes from Nicholas Weaver, a computer security researcher at the International Computer Science Institute, who was quoted by Ars Technica.

Defcon is the latest victim of the transaction malleability bug mentioned above that has already accounted for problems with three Bitcoin trading sites that were forced to shut down earlier this week.

Transaction malleability, which has been around since 2011, takes place when an attacker changes the cryptographic code that is used to create an ID for the exchange of funds before it is recorded in the block chain, the database of every transaction carried out in Bitcoins.

Slovenian site Bitstamp was forced to halt customer withdrawals earlier this week after hackers had exploited a bug that allowed them to carry out the attack and it came after a similar attack had forced Tokyo’s MtGox to shut its doors a week ago.

A third exchange, Bulgaria’s BTC-e, stated that some transactions could be delayed as a result with the two European services blaming a denial of service [DoS] attack.

Related: Digital currency surges in value – and it’s not Bitcoin

The value of Bitcoin has dropped slightly compared to the news earlier this week of the attacks on the exchanges and 1 BTC is currently worth $642 [£384] – down from the $665 [£402] it was at earlier on this week.

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