Throughout the years there have been multiple Bitcoin heists which put people on edge. Cryptocurrency is a very prized possession among criminals and hackers. Although the Bitcoin protocol has never been breached, centralized third-party service providers pose a systemic risk. A lot of funds has been lost throughout the years, particularly in 2011 and 2012.
One has to keep in mind that Bitcoin had very less value back in 2011 than it has today. Even so, the Bitomat.pl platform successfully lost 17,000 Bitcoin, albeit they were not stolen. In fact, their Bitcoin wallet was wiped during a server restart, and the company had no backup in place. Mt. Gox eventually bailed the company out, and customers were not affected by this loss. But the financial loss of US$231,570 had to be absorbed by someone.
In September of 2012, UK Bitcoin exchange Bitfloor lost 24,086 Bitcoin due to theft. A total of five separate transactions were executed from the company hot wallet during the span of 36 minutes. This theft was made possible due to Bitfloor storing an unencrypted wallet backup on their servers. So far, none of the funds have been recovered, and it remains a mystery as to who was behind this theft.
Perhaps one of the most famous Bitcoin heists ever is the double attack against Bitcoinica. The company was hacked twice in less than three months, resulting in over 58,000 Bitcoin being stolen during May and July of 2012. The entire hot wallet was compromised during the May attack, and the main database was leaked. In July, an unknown assailant compromised the Bitcoinica Mt. Gox account and liquidated 30% of the company’s assets.
In March of 2012, cloud hosting company Linode was hacked. However, it became apparent that this had to be an inside job, as someone deliberately took money from a lot of Bitcoin clients using this service. A total of eight accounts were targeted, including Bitcoinica and the Bitcoin.cz mining pool. A whopping 46,653 Bitcoin was stolen as a result, and never recovered.
July 2011, was not a good month for anyone who used the MyBitcoin service. Although some users suspected that this service was a scam from day one, it has never been proven. What once was a prominent company in the Bitcoin world ended up shutting down after 78,739 Bitcoin was stolen from customers. So far, this money has not been recovered, and victims are none the wiser as to who is behind the attack.
Despite the somewhat reassuring name, Bitcoin Savings and Trust lost a total of 263,024 Bitcoin between 2011 and 2012. Trendon Shavers, the perpetrator of this attack, was later caught by the SEC. In fact, he was ordered to serve 18 months in prison for running this Bitcoin Ponzi Scheme. Offering investors a 7% weekly return was never feasible, yet many people fell for his tricks.
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