On February 15, the China-located cryptocurrency exchange BTER lost 7,170 BTC because of a security breach. A statement on the BTER website reads:
“7170 BTC got stolen from our cold wallet in this transaction:
720 BTC bounty for chasing it back.
All wallets have been shut down and withdrawals of the unaffected coins will be arranged later.”
The announcement has been published when a number of the BTER customers paid attention to some elite transactions moving from Bter’s cold wallet to a random Bitcoin wallet address. After their successful completion, the amount was further transacted to another wallet. BTER.com is still not functioning.
The above-mentioned exchange announced a 720 BTC reward to anyone who can recover the bitcoins having tracked down the thief. According to Bitcoinist.net, it can be difficult to recover the funds in that way, as “several blockchain explorers have revealed that the bitcoins have likely already been sent through anonymization services, called Bitcoin mixers.”
After the notification of BTER, some users couldn’t withdraw funds from their HitBTC accounts. Probably, their accounts were frozen as a matter of precaution. It’s worth mentioning that BTER was hacked before.In 2014, 51,670,000 Nextcoins worth about $1.65 million at the time, were stolen.
Someone hacked Bter's NXT central account and stole 50m NXT. We are working with the dev for a plan. We will keep you updated.
— Bter.com Exchange (@btercom) August 15, 2014
Again, according to BTER.com itself, the hack occurred from a cold wallet. It means that the funds can’t be transferred externally. Cold wallets are used as an extra security measure to protect ‘hot’ wallets from being hacked.
This way to store bitcoins is considered to be a bulletproof one. It’s obvious that lots of bitcoin enthusiasts expressed confusion as to how the exchange’s cold wallet was hacked. As far as a cold wallet never touches the internet, it is not exposed to malware or hackers. So far, BTER has not announced how the hacker was able to get into the company’s cold wallet.
The thread on Reddit reads that some users are convinced that the hack was an insider job. User SmoothSloth says that “it is nearly impossible for a hack of this size to occur given the advent of Multi Signature and Multi Factor Authentication.”
“Like most hacks that have occurred since Mt. Gox, it is a result of criminal negligence.”
On Sunday, the price of Bitcoin increased to US$270. It happened before the alleged hack took place making some users speculate that the hackers may have intentionally manipulated the market just prior to the heist and subsequent sell off of the Bitcoins.
BTER has reported the theft to the local authorities and is working with investigators to retrieve the stolen digital currency.