BitNZ MailJet Hack: Difference between revisions

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{{Imported Case Study 2|source=https://www.quadrigainitiative.com/casestudy/bitnzmailjethack.php}}
{{Case Study Under Construction}}{{Unattributed Sources}}
{{Unattributed Sources}}


An interesting case, where the breach affected accounts directly, by the exploit of a third party mail provider. 2FA was supported but not enabled on many accounts. The exploit suggests that all the coins taken were stored in a hot wallet, so smaller reserves or any sort of time delay would have reduced the losses. Any platform protecting the funds in cold storage would have also been protected the moment the withdrawals were noticed as suspicious. After repaying customers, BitNZ continued to operate until eventually shutting down in 2017 over banking difficulties.
An interesting case, where the breach affected accounts directly, by the exploit of a third party mail provider. 2FA was supported but not enabled on many accounts. The exploit suggests that all the coins taken were stored in a hot wallet, so smaller reserves or any sort of time delay would have reduced the losses. Any platform protecting the funds in cold storage would have also been protected the moment the withdrawals were noticed as suspicious. After repaying customers, BitNZ continued to operate until eventually shutting down in 2017 over banking difficulties.


This exchange or platform is based in New Zealand, or the incident targeted people primarily in New Zealand.<ref name="mineforeman-209" /><ref name="reddit-210" /><ref name="newsdotbitcoin-211" /><ref name="ccn-212" /><ref name="bitcointalk-213" /><ref name="reddit-214" /><ref name="cointelegraph-215" />
<ref name="mineforeman-209" /><ref name="reddit-210" /><ref name="bitcointalk-213" /><ref name="reddit-214" />


== About BitNZ ==
== About BitNZ ==
“Danial Newton, the administrator of bitnz in a reddit post explained that he believes that the perpetrator gained access to the exchanges outward mail queue at MailJet.com and then set about resetting people’s accounts and intercepting the reset codes.” “On Monday, 11 August 2014 at 3am NZ time, \~39 bitcoins were stolen from bitNZ. Our email relay service provider was hacked which enabled the attacker to view all outgoing emails. The attacker used this information to reset user passwords and intercept the password reset email. If the user did not have 2FA the attacker was able to log on as the user and initiate a withdrawal. At the moment I am still analysing the the event and making sure the vulnerability is plugged (revoke email relay access, reset passwords/api-keys, purge sessions, check if user emails were modified etc).” “In mid-February, New Zealand bitcoin exchange BitNZ revealed it was ‘impossible’ to continue operations claiming New Zealand banks’ refusal to offer banking services to the platform. BitNZ, which has been functional since 2011, claimed to have processed over 11,000 bank transactions” “The New Zealand Bitcoin exchange Bitnz has recently announced to its customers it will be closing its doors soon. The company explains the unfortunate closure is due to a New Zealand banking system that won’t allow Bitcoin operations to hold bank accounts.” “Questions over bitNZ’s compliance with AML/KYC requirements were quickly answered, with the exchange having complied in full.”
“Danial Newton [was] the administrator of bitnz” which was a cryptocurrency exchange in New Zealand.


This exchange or platform is based in New Zealand, or the incident targeted people primarily in New Zealand.
He has the username djpnewton on Reddit<ref name="reddit-214" />.
 
The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.
 
Include:
 
* Known history of when and how the service was started.
* What problems does the company or service claim to solve?
* What marketing materials were used by the firm or business?
* Audits performed, and excerpts that may have been included.
* Business registration documents shown (fake or legitimate).
* How were people recruited to participate?
* Public warnings and announcements prior to the event.
 
Don't Include:
* Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
* Anything that wasn't reasonably knowable at the time of the event.
There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.


== The Reality ==
== The Reality ==
Line 37: Line 19:


== What Happened ==
== What Happened ==
The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.
“On Monday, 11 August 2014 at 3am NZ time, \~39 bitcoins were stolen from bitNZ.”
{| class="wikitable"
{| class="wikitable"
|+Key Event Timeline - BitNZ MailJet Hack
|+Key Event Timeline - BitNZ MailJet Hack
Line 44: Line 26:
!Description
!Description
|-
|-
|August 1st, 2014 12:00:34 AM MDT
|August 10th, 2014 9:00:00 AM MDT
|Main Event
|Bitcoin Theft
|Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.
|“On Monday, 11 August 2014 at 3am NZ time, \~39 bitcoins were stolen from bitNZ.”
|-
|August 11th, 2014 7:22:55 PM MDT
|Reddit Announcement Made
|Danial Newton, the administrator of BitNZ, posts on Twitter to announce the theft and the method of breach. According to the post, the thieves were able to get into the BitNX MailJet account and intercept all outgoing mail from the exchange service. From this access, they could intercept password reset emails and access/withdraw bitcoin funds of any account without 2-factor authentication enabled. Danial states that he will cover the losses, although an address is provided if anyone wishes to contribute towards it<ref name="reddit-214" />.
|-
|-
|
|February 8th, 2017 2:10:15 AM MST
|
|BitNZ Exchange Shuts Down
|
|BitNZ posts on Reddit to announce ther they are shutting down their services due to difficulties in obtaining banking, after having processed some 11,000 bank transactions<ref name="reddit-210" />. Other platforms including News.Bitcoin.com<ref name="newsdotbitcoin-211" />, CCN<ref name="ccn-212" /> and CoinTelegraph cover the news, with CoinTelegraph claiming that there was full compliance with the KYC/AML regulations<ref name="cointelegraph-215" />.
|}
|}
== Technical Details ==
“Danial Newton, the administrator of bitnz in a reddit post explained that he believes that the perpetrator gained access to the exchanges outward mail queue at MailJet.com and then set about resetting people’s accounts and intercepting the reset codes.”
“Our email relay service provider was hacked which enabled the attacker to view all outgoing emails. The attacker used this information to reset user passwords and intercept the password reset email. If the user did not have 2FA the attacker was able to log on as the user and initiate a withdrawal. At the moment I am still analysing the the event and making sure the vulnerability is plugged (revoke email relay access, reset passwords/api-keys, purge sessions, check if user emails were modified etc).”


== Total Amount Lost ==
== Total Amount Lost ==
The total amount lost has been estimated at $23,000 USD.
The total amount lost was reported as ~39 BTC and this value has been estimated at $23,000 USD.
 
How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?


== Immediate Reactions ==
== Immediate Reactions ==
How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?
The BitNZ administrator named Danial posted on Reddit to announce what had happened.


== Ultimate Outcome ==
== Ultimate Outcome ==
What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?
The BitNZ exchange ultimately shut down in 2017 with an inability to obtain further banking.
 
“In mid-February, New Zealand bitcoin exchange BitNZ revealed it was ‘impossible’ to continue operations claiming New Zealand banks’ refusal to offer banking services to the platform. BitNZ, which has been functional since 2011, claimed to have processed over 11,000 bank transactions” “The New Zealand Bitcoin exchange Bitnz has recently announced to its customers it will be closing its doors soon. The company explains the unfortunate closure is due to a New Zealand banking system that won’t allow Bitcoin operations to hold bank accounts.” “Questions over bitNZ’s compliance with AML/KYC requirements were quickly answered, with the exchange having complied in full.”


== Total Amount Recovered ==
== Total Amount Recovered ==
There do not appear to have been any funds recovered in this case.
Danial stated that he would cover losses for all users and so it is believed that all user losses were covered.


What funds were recovered? What funds were reimbursed for those affected users?
Donation Address:<ref>https://www.blockchain.com/explorer/addresses/btc/1NAVXrA8NnXURzdFNLf79p8YoLPBBfwnFi (Accessed Sep 4, 2024)</ref>


== Ongoing Developments ==
== Ongoing Developments ==
What parts of this case are still remaining to be concluded?
There are no ongoing developments as the platform has been shut down. It is unclear whether there is any further investigation going on into the culprits.
== General Prevention Policies ==
Coming soon.
== Individual Prevention Policies ==
== Individual Prevention Policies ==
{{Prevention:Individuals:Placeholder}}
{{Prevention:Individuals:Placeholder}}
Line 89: Line 78:


== References ==
== References ==
<references><ref name="mineforeman-209">[https://mineforeman.com/2014/08/12/new-zealand-exchange-bitnz-com-hacked-39-bitcoin-stolen/ New Zealand Exchange Bitnz.com hacked, 39 bitcoin stolen. - MineForeman.com] (Mar 3, 2020)</ref>
<references>
 
<ref name="mineforeman-209">[https://mineforeman.com/2014/08/12/new-zealand-exchange-bitnz-com-hacked-39-bitcoin-stolen/ New Zealand Exchange Bitnz.com hacked, 39 bitcoin stolen. - MineForeman.com] (Accessed Mar 3, 2020)</ref>
<ref name="reddit-210">[https://www.reddit.com/r/NZBitcoin/comments/5srnhv/bitnz_shutting_down_due_to_bank_hostility/ Bitnz shutting down due to bank hostility : NZBitcoin] (Mar 3, 2020)</ref>
<ref name="reddit-210">[https://www.reddit.com/r/NZBitcoin/comments/5srnhv/bitnz_shutting_down_due_to_bank_hostility/ Bitnz shutting down due to bank hostility - NZBitcoin Reddit] (Accessed Mar 3, 2020)</ref>
 
<ref name="newsdotbitcoin-211">[https://news.bitcoin.com/new-zealand-exchange-bitnz-shuts-down-banking-hostility/ New Zealand Exchange Bitnz Shuts Down Due to 'Banking Hostility' - News.Bitcoin.com] (Accessed Mar 3, 2020)</ref>
<ref name="newsdotbitcoin-211">[https://news.bitcoin.com/new-zealand-exchange-bitnz-shuts-down-banking-hostility/ New Zealand Exchange Bitnz Shuts Down Due to 'Banking Hostility' | Featured Bitcoin News] (Mar 3, 2020)</ref>
<ref name="ccn-212">[https://www.ccn.com/new-zealand-sees-new-bitcoin-exchange-bitnz-shutdown/ New Zealand Sees New Bitcoin Exchange after BitNZ Shutdown - CCN] (Accessed Mar 3, 2020)</ref>
 
<ref name="bitcointalk-213">[https://bitcointalk.org/index.php?topic=733970.0 Bitnz Offline?  down for maintenance - BitcoinTalk] (Accessed Mar 3, 2020)</ref>
<ref name="ccn-212">[https://www.ccn.com/new-zealand-sees-new-bitcoin-exchange-bitnz-shutdown/ New Zealand Sees New Bitcoin Exchange after BitNZ Shutdown] (Mar 3, 2020)</ref>
<ref name="reddit-214">[https://www.reddit.com/r/NZBitcoin/comments/2dak6a/bitnz_announcement/ bitNZ Announcement - NZBitcoin Reddit] (Accessed Mar 3, 2020)</ref>
 
<ref name="cointelegraph-215">[https://cointelegraph.com/news/flagship-new-zealand-exchange-bitnz-refused-banking-shuts-down Flagship New Zealand Exchange bitNZ Refused Banking, Shuts Down - CoinTelegraph] (Accessed Mar 3, 2020)</ref>
<ref name="bitcointalk-213">[https://bitcointalk.org/index.php?topic=733970.0 Bitnz Offline?  down for maintenance] (Mar 3, 2020)</ref>
</references>
 
<ref name="reddit-214">[https://www.reddit.com/r/NZBitcoin/comments/2dak6a/bitnz_announcement/ bitNZ Announcement : NZBitcoin] (Mar 3, 2020)</ref>
 
<ref name="cointelegraph-215">[https://cointelegraph.com/news/flagship-new-zealand-exchange-bitnz-refused-banking-shuts-down Flagship New Zealand Exchange bitNZ Refused Banking, Shuts Down] (Mar 3, 2020)</ref></references>

Revision as of 15:43, 13 September 2024

Notice: This page is a new case study and some aspects have not been fully researched. Some sections may be incomplete or reflect inaccuracies present in initial sources. Please check the References at the bottom for further information and perform your own additional assessment. Please feel free to contribute by adding any missing information or sources you come across. If you are new here, please read General Tutorial on Wikis or Anatomy of a Case Study for help getting started.

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An interesting case, where the breach affected accounts directly, by the exploit of a third party mail provider. 2FA was supported but not enabled on many accounts. The exploit suggests that all the coins taken were stored in a hot wallet, so smaller reserves or any sort of time delay would have reduced the losses. Any platform protecting the funds in cold storage would have also been protected the moment the withdrawals were noticed as suspicious. After repaying customers, BitNZ continued to operate until eventually shutting down in 2017 over banking difficulties.

[1][2][3][4]

About BitNZ

“Danial Newton [was] the administrator of bitnz” which was a cryptocurrency exchange in New Zealand.

He has the username djpnewton on Reddit[4].

The Reality

This sections is included if a case involved deception or information that was unknown at the time. Examples include:

  • When the service was actually started (if different than the "official story").
  • Who actually ran a service and their own personal history.
  • How the service was structured behind the scenes. (For example, there was no "trading bot".)
  • Details of what audits reported and how vulnerabilities were missed during auditing.

What Happened

“On Monday, 11 August 2014 at 3am NZ time, \~39 bitcoins were stolen from bitNZ.”

Key Event Timeline - BitNZ MailJet Hack
Date Event Description
August 10th, 2014 9:00:00 AM MDT Bitcoin Theft “On Monday, 11 August 2014 at 3am NZ time, \~39 bitcoins were stolen from bitNZ.”
August 11th, 2014 7:22:55 PM MDT Reddit Announcement Made Danial Newton, the administrator of BitNZ, posts on Twitter to announce the theft and the method of breach. According to the post, the thieves were able to get into the BitNX MailJet account and intercept all outgoing mail from the exchange service. From this access, they could intercept password reset emails and access/withdraw bitcoin funds of any account without 2-factor authentication enabled. Danial states that he will cover the losses, although an address is provided if anyone wishes to contribute towards it[4].
February 8th, 2017 2:10:15 AM MST BitNZ Exchange Shuts Down BitNZ posts on Reddit to announce ther they are shutting down their services due to difficulties in obtaining banking, after having processed some 11,000 bank transactions[2]. Other platforms including News.Bitcoin.com[5], CCN[6] and CoinTelegraph cover the news, with CoinTelegraph claiming that there was full compliance with the KYC/AML regulations[7].

Technical Details

“Danial Newton, the administrator of bitnz in a reddit post explained that he believes that the perpetrator gained access to the exchanges outward mail queue at MailJet.com and then set about resetting people’s accounts and intercepting the reset codes.”

“Our email relay service provider was hacked which enabled the attacker to view all outgoing emails. The attacker used this information to reset user passwords and intercept the password reset email. If the user did not have 2FA the attacker was able to log on as the user and initiate a withdrawal. At the moment I am still analysing the the event and making sure the vulnerability is plugged (revoke email relay access, reset passwords/api-keys, purge sessions, check if user emails were modified etc).”

Total Amount Lost

The total amount lost was reported as ~39 BTC and this value has been estimated at $23,000 USD.

Immediate Reactions

The BitNZ administrator named Danial posted on Reddit to announce what had happened.

Ultimate Outcome

The BitNZ exchange ultimately shut down in 2017 with an inability to obtain further banking.

“In mid-February, New Zealand bitcoin exchange BitNZ revealed it was ‘impossible’ to continue operations claiming New Zealand banks’ refusal to offer banking services to the platform. BitNZ, which has been functional since 2011, claimed to have processed over 11,000 bank transactions” “The New Zealand Bitcoin exchange Bitnz has recently announced to its customers it will be closing its doors soon. The company explains the unfortunate closure is due to a New Zealand banking system that won’t allow Bitcoin operations to hold bank accounts.” “Questions over bitNZ’s compliance with AML/KYC requirements were quickly answered, with the exchange having complied in full.”

Total Amount Recovered

Danial stated that he would cover losses for all users and so it is believed that all user losses were covered.

Donation Address:[8]

Ongoing Developments

There are no ongoing developments as the platform has been shut down. It is unclear whether there is any further investigation going on into the culprits.

Individual Prevention Policies

No specific policies for individual prevention have yet been identified in this case.

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Policies for platforms to take to prevent this situation have not yet been selected in this case.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

No specific regulatory policies have yet been identified in this case.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.

References

  1. ↑ New Zealand Exchange Bitnz.com hacked, 39 bitcoin stolen. - MineForeman.com (Accessed Mar 3, 2020)
  2. ↑ 2.0 2.1 Bitnz shutting down due to bank hostility - NZBitcoin Reddit (Accessed Mar 3, 2020)
  3. ↑ Bitnz Offline? down for maintenance - BitcoinTalk (Accessed Mar 3, 2020)
  4. ↑ 4.0 4.1 4.2 bitNZ Announcement - NZBitcoin Reddit (Accessed Mar 3, 2020)
  5. ↑ New Zealand Exchange Bitnz Shuts Down Due to 'Banking Hostility' - News.Bitcoin.com (Accessed Mar 3, 2020)
  6. ↑ New Zealand Sees New Bitcoin Exchange after BitNZ Shutdown - CCN (Accessed Mar 3, 2020)
  7. ↑ Flagship New Zealand Exchange bitNZ Refused Banking, Shuts Down - CoinTelegraph (Accessed Mar 3, 2020)
  8. ↑ https://www.blockchain.com/explorer/addresses/btc/1NAVXrA8NnXURzdFNLf79p8YoLPBBfwnFi (Accessed Sep 4, 2024)
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