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February 14, 2014updated 04 Apr 2017 4:08pm

Bitcoin value falls after Silk Road 2 hacked to the tune of $2.7m

The operator of dark market website Silk Road 2 lost $2.7m in a scam that exploited a vulnerability in the bitcoin protocol on the night of 13 February.

By Angelo Boccato

The operator of dark market website Silk Road 2 lost $2.7m in a scam that exploited a vulnerability in the bitcoin protocol on the night of 13 February.

 

According to "Defcon", a Silk Road 2 administrator, the site fell victim to a massive hack in which 4,476 bitcoins were stolen.

 

Defcon said: "I should have taken MtGox and Bitstamp’s lead and disabled withdrawals as soon as the malleability issue was reported.

 

"I was slow to respond and too sceptical of the possible issue at hand".

 

According to Defcon the exploit of the "transaction malleability" loophole, which forced bitcoin exchanges MtGox and Bitstamp to suspend operations at the beginning of the week, is to blame for the massive hack.

 

The vulnerability in the bitcoin protocol allows someone to use the network to alter transaction details to make it seem like a sending of coins to a wallet did not occur while in fact it did occur.

 

Many Silk Road 2 users are not convinced by the explanations given by "Defcon", as security experts have claimed that transaction malleability is not an issue deep enough to permit such a vast theft.

 

The news about the massive hack managed to send the price of Bitcoin back below the $600 mark, to a low of $532.

 

At the time of writing, the digital currency values were progressively recovering at a modest rate.

 

The original Silk Road was an online marketplace founded and operated by a user known only as "Dread Pirate Roberts"; the site was first launched in 2011.

 

Silk Road managed to increase the popularity of bitcoin and had trade revenue of $1.2m every month.

 

The site was shut down by the FBI in October 2013, with police alleging that the real identity of Dread Pirate Roberts is one Ross William Ulbricht.

 

Silk Road was subsequently re-launched, while Ulbritch awaited trial on charges including murder-for-hire and narcotics trafficking.

 

 

 

 

Related articles:

HotwirePE introduces first Bitcoin bank in Australia

New York to adapt state legislation for Bitcoin, says head of financial services department

Bitcoin price drops after marketplace halts withdrawals

 

 

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