Security

Cryptsy Implodes with Bizarre Blog Statement

High profile online crypto exchange Cryptsy (the subject of much speculation over the last few weeks), finally published a blog ‘addressing’ the issues it has been having. The foremost requirement in the minds of customers was an explanation detailing the reasons withdrawals have not been possible recently.

In a bizarre blog post Cryptsy admitted that the previously published ‘phishing’ attack was not the reason for the current issues and instead claimed that a Hack in 2014 by the Devs behind Lucky7coin had caused the platform to lose thousands of bitcoins. The blog by Paul Vernon also went on (incredibly) to say that it saw no need to inform customers about the hack as it thought it could ‘recover the funds’ through profitable trading conditions!

Vernon is offering a 1000 btc reward for information directly leading to a recovery of the missing funds.

The blog at http://blog.cryptsy.com states that the site is looking for a resolution:

“Here are our options:

1. We shut down the website and file bankruptcy, letting users file claims via the bankruptcy process and letting the court make the disbursements.

– or –

2. Somebody else comes in to purchase and run Cryptsy while also making good on requested withdrawals.

– or –

3. If somehow we are able to re-aquire the stolen funds, then we allow all withdrawal requests to process.

I’m obviously open to any other ideas people may have on this.

If you have information, you can email reward@cryptsy.com”

Our view:

Another major setback for crypto and a spectacular failure by Cryptsy.

 

Ponzis, Scams, Theft and The Price Of Bitcoin

Christmas 2014 will go down in history as a time when hackers, thieves and ponzis changed everything. As I write this post BTC has sunk to $186 (and was considerably lower earlier in the day), major cloud mining operations have powered down their farms (cex.io and hashnest) and unless the price recovers the whole BTC landscape will irreversibly change.

What has caused the current issues?

Around Christmas Eve several cloud mining operations including PB Mining, Hashie, Hashprofit and LTC Gear suffered hacks or operational issues with a net effect of halting payments to customers. The circumstances and validity of each issue no doubt vary but the consensus seems to be that PB mining could well have been a ponzi although the operators claim the closure was a result of blackmail and personal threats. Hashie claimed a hack although the way they dealt with the aftermath screamed incompetance or ponzi. Hashprofit claimed a db breach although in hindsight this looks like a solid ponzi and finally LTC Gear more believably claimed a hack but the jury is still out as the website has still to recover and they are several weeks behind with payments.

To compound matters, the large exchange Bitstamp had a major breach/hack involving the theft of $5 million worth of Bitcoin. Clearly evoking memories of the Mt. Gox situation, the markets reacted badly to an already depressed value.

So what next?

Some are predicting a crash of epic proportions and the death of bitcoin (many of these doommongers are from traditional financial institutions who are threatened in the extreme by cryptocurrency). Their insecurity is manifesting itself into unprecedented attacks during the ongoing slump. Witness this Guardian article (very naive in it’s assumption that Bitcoin has no use)

Our View

Cryptocurrency is in an embryonic stage similar to the birth of the internet. Such great ideas will always prosper even though the naysayers will do their utmost to put a ‘spanner in the works’. Our philosophy is to sit tight, buy bitcoin and ride out the slump.

 

Beware Bitcoin Scams!

How to avoid bitcoin scams

The Bitcoin community is a fairly solid one but like anything gathering traction, rogues will infiltrate at will. The anonymity of Bitcoin with the benefit of decentralization can also be it’s weakness.

Scam sites can remain undetected and once your cryptocurrency leaves your wallet there isn’t a great deal you can do to get it back. One site looking to change all that is Badbitcoin.org which lists dubious websites.

Kosher sites can ask to be delisted from the site if a mistake has been made, but the site is worth a scan before you dive in to any double your money schemes. One such site currently advertising heavily is doubleurbtc.com. It promises quick returns on your investment with daily payouts. The only problem is that once you’ve received the first few payments, your account suddenly disappears and you’ve been scammed!

Bitcoin Magazine

Bitcoin Magazine (Photo credit: zcopley)

 

Vircurex Battles Against Insolvency

Bitcoin Wallpaper (2560x1600)

(Photo credit: PerfectHue)

Another virtual currency exchange Vircurex is battling to stay afloat following 2 large hacks and heavy withdrawals.

Following the news that Mt. Gox had filed for Bankruptcy, Vircurex has locked down accounts to try and find a way out of the situation. A statement on the Beijing based firm’s website reads:

1. We will introduce an additional balance type called “Frozen Funds”. Funds in this balance type cannot be used to trade or withdraw. Those are the balances that the exchange will gradually pay back and hence transfer back to the available balance over time.
2. We will move all current balances for BTC, LTC, TRC and FTC to the “Frozen Balance”, i.e. your balance will be set to 0.
3. We’ll take the current available cold storage balance and distribute it based on the below described distribution logic.
4. Monthly we will take the net profit of the exchange and credit back that amount distributed to the users based on the described distribution logic.

We are possibly seeing an end to vulnerable first phase exchanges with the new breed of exchanges paying more regard to security and transparency. Let’s hope so!

As ever, please exact due diligence before you place funds with any third party. See our security guide for more information.

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Bitcoins, Security and Mt. Gox

Probably the biggest news in the bitcoin world this year has been the collapse of Mt. Gox, one of the largest Bitcoin trading platforms. Due to being hacked the company was unable to fulfil it’s obligations and had to file for bankruptcy in Tokyo and New York. There are also rumours of fraud within the company.

Collectively the collapse and media coverage contributed to a fall in the bitcoin price, not to mention investors losing valuable bitcoin holdings. Mt. Gox CEO Mark Karpeles admitted that the company lost around 750,000 of its customers’ bitcoins.

Mt. Gox CEO Mark Karpeles with commemorative bitcoin

Mt. Gox CEO Mark Karpeles

So with security uppermost in the collective conscience of the virtual currency community what can we do to secure investments and protect against hacking independently.

Firstly do some research on your chosen trading platform. Find out who owns it, where it is based and what kind of customer service is offered. Coinbase and Cryptsy are large established platforms.

Passwords

We’ve all seen the google stats on the most widely used passwords. Yes ‘password’ is still used by thousands of hapless punters!! Your password should be at least 12 characters containing a variety of upper and lower case letters and random symbols. Avoid using common dictionary words and if possible don’t write your passwords down. Also avoid using the same password for multiple logins. If you get hacked the consequences will be even more dire. Your own email password should be similarly complex.

Two-Factor Authentication (2FA)

This involves not only having a password but also mobile phone authorisation (via code) when you log in. It’s a simple process of installing the Google Authenticator app (Authy) and making sure you have your smartphone to hand when you log in.

Protect your PC or Mac

Always password protect your computer and make sure your wifi connection is secure and protected using WPA2 or stronger encryption. Never download files that you haven’t explicitly requested and avoid visiting ‘sketchy’ sites. Always use Anti-Virus software. Passive products like Malware Bytes are very good.

Coin Wallet

If you store a local version of your wallet, always encrypt it with a secure passphrase and remember to regularly back it up locally and in a secure cloud storage area. Don’t forget your passphrase or your coins will be lost for ever if you should forget it.

These are the bare minimum basics of the security measures you should take. Situations like Mt. Gox are hard to take precautions against, but a common sense approach to storing large amounts of coins should be taken. Spread your assets if possible and keep a regular eye on the blogs and news pages for any current issues.

CEX.io

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