29 May 2017
register for the webinar

BitPay loses $1.8m in phishing attack

17 September 2015  |  8546 views  |  2 Bitcoin

BitPay lost $1.8 million in a phishing attack late last year, according to lawsuit filed by the bitcoin payment processing firm against an insurer it is trying to get to cover some of the losses.

According to court documents obtained by the Atlanta Business Chronicle, last December BitPay CFO Bryan Krohn received an email from someone purporting to be from a digital currency publication.

However, the sender's email account had been hacked and the email directed Krohn to a site controlled by the hacker where he provided the credentials for his corporate email account.

The crook used the email account to fraudulently transfer 5000 bitcoins worth $1.85 million in three separate transactions.

In a statement, BitPay CEO Stephen Pair says: "This was an isolated incident, and none of BitPay’s customers, affiliates or merchants lost any funds. The only victim of the theft was BitPay. All merchant funds were secure, and there were no disruptions to BitPay’s payment services at any time."

The company is suing Massachusetts Bay Insurance Company, which has refused to pay out on a policy with a limit of $1 million less BitPay's deductible of $50,000.

KeywordsLEGAL

Comments: (2)

Mark Rittmayer
Mark Rittmayer - CSC Asia Pacific Ltd - Hong Kong | 17 September, 2015, 20:48 The insurer will pay if the event is a covered loss. If it not explicitly covered it may take some time to interpret the language of the policy where the coverage exists. The insurers first line of defense is to deny coverage unless explicitly covered, whereas in this case a bitcoin processor may not have been understood. Insurance companies are there for that, to provide coverage, and make payments for covered losses. Just the reading of the deductible and the maximum amount leads me to believe this is a general coverage policy. I would like to see the actual policy.
Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
Hitesh Thakkar
Hitesh Thakkar - FIS Payments Software and Services India - India | 18 September, 2015, 17:50

I agree with present stance of Insurance company as this incident had occured as Phishing attack. Bitpay would have informed as part of IT control about dos and don'ts of IT security ( Standard IT security policy guidelines) and iron cladded Firewalls, IDS,HDS etc controlling such attacks apart from IT security awarness.

I wonder Blockchain could have been used as electronic journal which can be used to trace those Three transactions.

Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Federal agent pleads guilty to looting Silk Road cash

Federal agent pleads guilty to looting Silk Road cash

01 September 2015  |  4492 views  |  0 comments | 6 tweets | 2 linkedin
Karpeles arrested; former Mt Gox employee spills beans on shady business dealings

Karpeles arrested; former Mt Gox employee spills beans on shady business dealings

03 August 2015  |  4064 views  |  1 comments | 7 tweets | 2 linkedin
Mike Tyson bites into bitcoin

Mike Tyson bites into bitcoin

27 July 2015  |  5854 views  |  1 comments | 8 tweets | 3 linkedin
Bitpay and Bitstraat bid to turn Amsterdam into the world's Bitcoin capital

Bitpay and Bitstraat bid to turn Amsterdam into the world's Bitcoin capital

03 December 2014  |  8575 views  |  0 comments | 12 tweets | 12 linkedin
Former SEC chairman Levitt becomes advisor to bitcoin firms

Former SEC chairman Levitt becomes advisor to bitcoin firms

28 October 2014  |  8394 views  |  0 comments | 12 tweets | 8 linkedin
BitPay shoots for the moon with $30 million funding round

BitPay shoots for the moon with $30 million funding round

13 May 2014  |  5484 views  |  2 comments | 3 tweets | 3 linkedin
MT Gox goes up in smoke. Is this the end for bitcoin?

MT Gox goes up in smoke. Is this the end for bitcoin?

25 February 2014  |  7117 views  |  5 comments | 15 tweets | 10 linkedin

Related company news

 

Related blogs

Create a blog about this story (membership required)
Download the paper nowvisit www.niceactimize.comvisit www.events.sap.com

Top topics

Most viewed Most shared
BBVA launches Open API marketplaceBBVA launches Open API marketplace
14170 views comments | 53 tweets | 81 linkedin
Bank/fintech collaboration can take transaction banking to new heightsBank/fintech collaboration can take transa...
8055 views comments | 12 tweets | 24 linkedin
R3 raises $107mR3 raises $107m
7553 views comments | 16 tweets | 16 linkedin
TransferWise launches multi-currency business bank accountsTransferWise launches multi-currency busin...
7364 views comments | 12 tweets | 21 linkedin

Featured job

Six Figure Base + Commission + Stock Options
London

Find your next job