Bitcoin plunges again after dark market Web hack
14 February 2014 | 7768 views | 7
The price of bitcoin plunged again overnight after the operator of dark market Web site Silk Road 2 claimed to have lost $2.7 million in a scam exploiting a known vulnerability in he crypto-currency.
Defcon, a Silk Road 2 moderator, informed users that the site had fallen victim to a massive hack in which 4476 bitcoins were stolen. He blamed the exploit on the "transaction malleability" loophole, which forced exchanges MT Gox and Bitstamp to suspend operations earlier this week.
The vulnerability makes it possible for someone to use the network to alter transaction details to make it seem like a sending of coins to a wallet did not occur when in fact it did occur. Since the transaction appears as if it has not proceeded correctly, the bitcoins may be resent.
In a post on the Tor network, Defcon writes: "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."
While many users are sceptical of the claims, writing off the theft as an insider scam, the news spooked the market, sending the price of Bitcoin back below the $600 mark, to a low of $532. At the time of writing, bitcoin values have staged a modest recovery, reaching $608 at pixel time.