Bitcoin: $64m in cryptocurrency stolen in ‘sophisticated’ hack, exchange says

Nearly $64m in bitcoin has been stolen by hackers who broke into Slovenian-based bitcoin mining marketplace NiceHash.

The marketplace suspended operations on Thursday while it investigated the breach, saying it was working with law enforcement as “a matter of urgency” while urging users to change their passwords.

The hack was “a highly professional attack with sophisticated social engineering” that resulted in approximately 4,700 bitcoin being stolen, worth about $63.92m at current prices, said NiceHash head of marketing Andrej P Škraba.

NiceHash is a digital currency marketplace that matches people looking to sell processing time on their computers for so called miners to verify bitcoin users’ transactions in exchange for the bitcoin.

Troubles with the website over the past day or so drew alarm and complaints, with many bitcoin owners posting panicked comments on NiceHash’s social media accounts.

NiceHash said in a statement: “We understand that you will have a lot of questions, and we ask for patience and understanding while we investigate the causes and find the appropriate solutions for the future of the service.”

The price of bitcoin has surged to more than $14,668, gaining around $2,000 (£1,494) of value in a day according to bitcoin monitor CoinDesk. That compares with a value below $1,000 at the beginning of the year.

Online security is a vital concern for cryptocurrency marketplaces and exchanges, with bitcoins contained within digital wallets that have increasingly become a target for hackers as the number of bitcoins stored and their value has skyrocketed over the last year.

In Japan, following the failure of bitcoin exchange Mt Gox, new laws were enacted to regulate bitcoins and other cryptocurrencies. Mt. Gox shut down in February 2014 having lost approximately 850,000 bitcoins, potentially to hackers. Mark Karpelès, head of Mt Gox, went on trial in Japan in July, facing up to five years in jail under charges of embezzlement and the lost of $28m of user funds.

What is bitcoin and is it a bad investment?

Bitcoin is the first, and the biggest, “cryptocurrency” – a decentralised tradable digital asset. Whether it’s a bad investment is the $97bn question (literally, since that’s the current value of all bitcoins in existence). Bitcoin can only be used as a medium of exchange and in practice has been far more important for the dark economy than it has for most legitimate uses. The lack of any central authority makes bitcoin remarkably resilient to censorship, corruption – or regulation. That means it has attracted a range of backers, from libertarian monetarists who enjoy the idea of a currency with no inflation and no central bank, to drug dealers who like the fact that it’s hard (but not impossible) to trace a bitcoin transaction back to a physical person.

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