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