Is BitGo To Blame For The Bitfinex Bitcoin Theft?

In light of the recent Bitfinex attack, BitGo revealed a rather interesting statement. The company claimed their own investigation has yielded no evidence of a breach of any of their servers during the Bitfinex attack. This is rather strange, as all of the missing funds was drained from multisignature wallets, which should be secured by BitGo’s technology.

A Rather Worrisome Scenario For BitGo?

The way most people look at this statement is as follows: BitGo secures BitFinex’s cold storage but did not record a breach. However, the funds were stolen from multisignature wallets. If there was no breach, to begin with, how did the funds go missing then? A rather worrisome option to consider for sure.

While no one is saying Bitfinex is not to blame for this hack, it also goes to show BitGo may not be as secure as most people assumed at first. The company specializes in doing one job, yet some people feel they utterly failed at doing just that. Some people even go as far as referring to this incident as “allowing customers to implement a solution that allows for theft”. If this is something that can be legally proven, BitGo may find themselves in hot waters very soon.




This matter becomes more intriguing when taking into account how every Bitfinex transaction has to be co-signed by BitGo. If their service was not breached, it is unlikely their private key was issued to steal the funds. This leaves very few other options on the table, albeit one should not exclude an inside job either at this stage.

What is perhaps even more worrisome is how there does not seem to be any trace of the stolen funds. No one has been able to find out the specific transaction yet at this stage. Moreover, this makes it impossible to determine where the funds are going. Said information may be revealed at a later date, though.

But there is more, as some Twitter users are wondering what limits BitGo has implemented for multisignature withdrawals. A total sum of nearly 120,000 Bitcoin in one transaction is rather significant, and can hardly be warranted by any legitimate action. Large withdrawals such as those should raise plenty of red flags for BitGo, yet for some reason, the company did not find this request unusual.

Image credit 1

If you liked this article follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin and altcoin price analysis and the latest cryptocurrency news.

  • Flibbr

    The last bitfinex hack led to a loss of 1,500 btc. The old Hot/Cold wallet system was good. I mean, if your site is suddenly requesting you stick 120,000 btc in the hot wallet you’re not going to sign that transaction. lol

  • Victor

    that 119,756 btc sum is done over the course of many transactions over several multisig wallets. It was NOT done in just ONE transaction.