Hacks, Scams and Attacks: Blockchain's 2017 Disasters

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Gox was a bitcoin exchange based in ShibuyaTokyoJapan. In FebruaryMt. Gox suspended trading, closed its website and exchange service, and filed for bankruptcy protection from creditors.

New evidence presented in April by Tokyo security company WizSec led them to conclude that "most or all of the missing bitcoins were stolen straight out of the Mt. Gox hot wallet over time, beginning in late The Gathering Online fantasy-based card game service, to let them trade "Magic: The Gathering Online" cards like stocks. The Gathering Online eXchange". He reused the domain name in to advertise his card game The Far Wilds. In JulyMcCaleb read about bitcoin on Slashdot[21] and decided that the bitcoin community needed an exchange for trading bitcoin and regular currencies.

On Bitcoin blockchain incidentedit 18, Mt. Gox bitcoin blockchain incidentedit its exchange bitcoin blockchain incidentedit price quoting service deploying it on the spare mtgox. On 19 Junea security breach of the Mt. Gox bitcoin exchange caused the nominal price of a bitcoin to fraudulently drop to one cent on the Mt. Gox exchange, after a hacker allegedly used credentials from a Mt. Gox auditor's compromised computer to transfer a large number of bitcoins illegally to himself.

He used the exchange's software to bitcoin blockchain incidentedit them all nominally, creating a massive " ask " order at any price.

Within minutes the price corrected to its correct user-traded value. Gox still had control of the coins, the move ofbitcoins from "cold storage" to a Mt. Gox address was announced beforehand, and executed in Block In Octoberabout two dozen transactions appeared in the block chain Block [31] that sent a total of 2, BTC to invalid addresses. As no private key could bitcoin blockchain incidentedit be assigned to them, these bitcoins were effectively lost. While the standard client would check for such an error and reject the transactions, nodes on the network would not, exposing a weakness in the protocol.

As a result, transactions from Mt. Gox to those accounts were cancelled by Dwolla. The funds never made it back to Mt. Gox help desk issued the following comment: Gox as we have never had this case before and we are working with Dwolla to bitcoin blockchain incidentedit your returned funds.

In Bitcoin blockchain incidenteditthe bitcoin transaction log or " blockchain " temporarily forked into two independent logs, with differing rules on how transactions could be accepted. Gox bitcoin exchange briefly halted bitcoin deposits. Gox suspended trading from 11—12 April for a "market cooldown".

Around mid-MayMt. Gox tradedbitcoins per day, per Bitcoin Charts. Gox, alleging bitcoin blockchain incidentedit breach of contract. Gox's Bitcoin blockchain incidentedit American services.

Gox failed to allow it to move existing U. Gox suspended withdrawals in US dollars on June 20, Gox transactions pressured Mt. Gox from then on to close its account. Gox announced that it had "fully resumed" withdrawals, but as of September 5,few US dollar withdrawals had been successfully completed.

On August 5,Mt. Gox announced that it incurred "significant losses" due to crediting deposits which had not fully cleared, and that new deposits would no longer bitcoin blockchain incidentedit credited until the funds transfer was bitcoin blockchain incidentedit completed. Wired Magazine reported in November that customers were experiencing delays of weeks to months in withdrawing cash from their accounts. Customer complaints about long delays were mounting as of Februarywith more than 3, posts in a thread about the topic on the Bitcoin Talk online forum.

On 7 FebruaryMt. Gox halted all bitcoin withdrawals. Since the transaction appears as if it has not proceeded correctly, the bitcoins may be resent. Mt Gox is working with the bitcoin core development team and others to mitigate this issue. On 17 Februarywith all Mt. Gox withdrawals still halted and competing exchanges back in full operation, the company published another bitcoin blockchain incidentedit release indicating the steps it claimed bitcoin blockchain incidentedit was taking to address security issues.

On 20 Februarywith all withdrawals still halted, Mt. Gox issued yet another statement, not giving any date for the resumption of withdrawals. Gox headquarters in Tokyo continued.

Citing "security concerns", Mt. Gox moved its offices to a different location in Shibuya. Bitcoin prices quoted by Mt. Gox paying its customers. On 23 February bitcoin blockchain incidentedit, Mt. On 24 FebruaryMt. Bitcoin blockchain incidentedit suspended all trading, and hours later its website went offline, bitcoin blockchain incidentedit a blank page.

Six other major bitcoin exchanges released a joint statement distancing themselves from Mt. Gox, shortly before Mt. Gox's website went offline. On 25 FebruaryMt. Gox reported on its website that a "decision was taken to close all transactions for the time being", citing "recent news reports and the potential repercussions on Mt Gox's operations".

Gox was "at a turning point". From 1 February until the end of March, during the bitcoin blockchain incidentedit of Mt. On 28 February Mt. Gox filed in Tokyo for a form of bankruptcy protection from creditors called minji saisei or civil rehabilitation to allow courts to seek a buyer, reporting that it had liabilities of about 6. Gox also faced lawsuits from its customers.

On 9 MarchMt. Gox filed for bankruptcy protection in the USto halt U. On 20 MarchMt. Gox reported on its website that it found On April 14, Mt. Gox gave up its plan to rebuild under bankruptcy protection, and asked a Tokyo court to allow it to bitcoin blockchain incidentedit liquidated. In a 6 Jan interview, Kraken bitcoin exchange CEO Jesse Powell discussed being appointed by the bankruptcy trustee to assist in processing claims by thecreditors of Mt.

Gox computer system to increase the balance in an bitcoin blockchain incidentedit -- this charge was not related to the missingbitcoins. Gox, and moving it into an account he controlled, approximately six months before Mt. Gox failed bitcoin blockchain incidentedit early By Maycreditors of Mt.

Gox went bankrupt, which they asked be paid to them. In Marchthe trustee Kobayashi said that enough BTC has been sold to cover the claims of creditors. From Wikipedia, the free encyclopedia. Currency Bitcoin Website www. New Challenges and Responses". Retrieved 9 December — via Bitcoin blockchain incidentedit Books. The Wall Street Journal. Analytics and Case Studies". How to Survive Our Faster Future".

The New Bitcoin blockchain incidentedit Times. Gox abandons rebuilding plans and files for liquidation: Retrieved 9 December Retrieved 10 December Most or all of the missing bitcoins were stolen straight out of the Mt.

Consumers, Lifestyles and Markets". Retrieved 24 February Retrieved 28 April Gox bitcoin exchange closure could help legitimize the currency".

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Bitcoin's blockchain can be loaded with sensitive, unlawful or malicious data, raising potential legal problems in most of the world, according to boffins based in Germany. The researchers suggest Bitcoin's blockchain can also be loaded with malware, something Interpol warned about three years ago but has not yet been documented in the wild.

The Bitcoin blockchain is a distributed ledger or database that contains linked records of all Bitcoin transactions. These records or blocks hold batches of hashed transactions and are linked to preceding blocks by a cryptographic signature. The blocks also allow for additional data, and therein lies the issue. In an email to The Register , Roman Matzutt, a researcher with RWTH Aachen University and one of the co-authors of the paper, said the problem exists with other blockchains that allow content to be inserted, such as Litecoin and Ethereum.

The paper identifies several mechanisms for adding arbitrary data to the Bitcoin blockchain. Augmenting transactions in this way allows for additional arguably useful Bitcoin-related services, such as digital notarization and digital rights management.

But it also adds the possibility of abuse. At present, few Bitcoin blockchain transactions contain extra data — only 1. Nonetheless, the presence of even a small amount illegal or objectionable content could pose problems for participants.

The researchers acknowledge that there haven't yet been definitive court rulings on this specific issue but insist "However, considering legal texts we anticipate a high potential for illegal blockchain content to jeopardize blockchain-based system such as Bitcoin in the future," they state.

CryptoGraffiti anticipates the risk posed by objectionable content in policy statement for those who attempting to post data to the Bitcoin blockchain: In case of abuse we may report your IP address to the police. That's not necessarily much of a deterrent. While adding something like "Remember Tiananmen Square" or a picture of the Dalai Lama to the blockchain wouldn't be an issue in the US, it could cause Chinese authorities to take steps to prevent that content from being redistributed through Bitcoin nodes in China.

Adrian Colyer, a partner with VC firm Accel in London who wrote a blog post about the paper, suggests the ability to add arbitrary data to Bitcoin's blockchain could be used as a pretense for governments to harass political foes operating Bitcoin nodes. Matzutt confirmed that an individual could "poison" the blockchain by inserting a politically contentious image. Matzutt echoed Harding's sentiments. He pointed to an upcoming paper , to be presented in April, that deals with the issue.

Matzutt argues that until countermeasures such as fees are formalized, the Bitcoin community could deploy a quick fix such as rejecting "suspicious" transactions. The Register - Independent news and views for the tech community. Part of Situation Publishing.

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