BTC-e Hack
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It appears that the balance stolen was in Liberty Reserve currency and that this was then traded for BTC. Liberty Reserve provided a centralized payment network with coins backed by USD and EUR (similar to present-day stablecoins), which featured an API. The API key allowed for automation of payments, and if compromised would thus allow a perpetrator to spend or transfer funds, similar to a private key. Thus, the exploit was simply that this key (effectively a hot wallet as far as the centralized Liberty Reserve was concerned) was compromised, so very similar to a standard hot wallet hack.
This exchange or platform is based in Russia, or the incident targeted people primarily in Russia.
About BTC-e
“On July 31, 2012, the BTC-E Liberty Reserve API secret key was broken. This key was shorter than it needed to be at only 16 characters long. The attacker initiated many Liberty Reserve deposits and injected large amounts of USD into the system, which were quickly sold for BTC. Not all BTC was withdrawn; official estimates state that the scope was limited to 4500 BTC. Similar to the June 2011 Mt. Gox Incident, the BTC-E market was disturbed during the duration of the hack. The handling of this hack was widely applauded after BTC-E revealed they would cover the losses and revert to a backup made just before the hack.”
This exchange or platform is based in Russia, or the incident targeted people primarily in Russia.
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
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
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.
| Date | Event | Description |
|---|---|---|
| July 1st, 2012 12:00:11 AM | First Event | This is an expanded description of what happened and the impact. If multiple lines are necessary, add them here. |
Total Amount Lost
$42 000 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
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?
Ultimate Outcome
What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?
Total Amount Recovered
$0 USD What funds were recovered? What funds were reimbursed for those affected users?
Ongoing Developments
What parts of this case are still remaining to be concluded?
Prevention Policies
The stolen funds were not cryptocurrency, and thus were not stored in multi-signature wallets. If a similar loss were to happen based on another currency or balance manipulation, such a theoretical loss would be limited to the amount immediately withdrawable via the connected hot wallets. Therefore, this could also be prevented through hot wallet contingency planning.
References
Cryptocurrency exchange WEX/BTC-e tied to Bitcoin ransomware hackers (Feb 1)
List of Major Bitcoin Heists, Thefts, Hacks, Scams, and Losses [Old] (Jan 27)
List of Major Bitcoin Heists, Thefts, Hacks, Scams, and Losses (Feb 14)