Bitcoin Forum

https://bitomat.pl/Home/Statement (In polish)
http://reddit.com/r/Bitcoin/comments/j4t58/3rd_largest_bitcoin_exchange_has_lost_its/

Yeah, it looks like someone didn't read the docs for AWS before setting up an exchange. :\

Also, how you end up holding ~$250k (at least) and not having off-site backups, I do not know.

GOOD GOD!? Were they really the 3rd largest?

yea they were behind tradehill...  for some reason bitcoins are highly adopted in Poland.

you guys know what we say about Poland in Germany? ;)

no off-site backup for a production site? how amateurish. But this is actually bullish news for BTC, 17000 BTC has just been destroyed, this should increase the value of the rest of the BTC by almost 2%.

It would be fitting justice if some of those coins were stolen .  but most likely they were earned the hard way,  mining or alpaca socks.

"lost"? Do they think we are idiots? 17000btc and no backup, nothing? Ahahahahah

More like it was a scam.

"That was a mistake?"

:P

I think it's closer to almost 1/4 of a percent.

It's not really good news, the decrease in supply is dwarfed by the increases of anxiety over bitcoin.

If you are a relatively new investor to bitcoin and read about the 25l stolen, the mtgox hack, third biggest exchange loses all it's coin, mtgox shows coins at 1.3 million each, the dwolla charge back hack and mybitcoin one of the largest and most recommended online wallet services went dark this weekend and their doesnt seem to be any way to contact the owner or any info on it.

This is a dark day for the coin, and this shit needs to stop happening for it to become mainstream. A stock exchange can fall but they will still eventually find your stocks. These coins just vanished.

Someone really believe they "lost" 17000btc?  ::)

a day extremely dark.

no I mean the jokes (sorry to the Polish ppl here ;) )

You know where you find your car after it got stolen? (you can replace car with any good you want  ;D )

Oh I know another one:

Why do Russians always steal 2 cars in Germany?

- Because on the way home, they have to pass through Poland!


Anyways:
Maybe it still can somehow be recovered? Pay the hoster to rip out the HDD asap and run some undelete programs... I don't know which infrastructure they used though, so it might or might not help.

Edit:
Ok, read the statement... where exactly does it state how many BTC were lost? It only says, bitomat.pl is for sale for 17 000 BTC, not that 17k have been "flushed".

I, for one, am not buying an EC2 failure.  Attaching EBS is kindergarten stuff in cloud compute land.  I don't think there would be any way for someone to develop and operate a trading platform in AWS without being keenly aware of the details at this level, and anyone with two neurons exchanging data would be mighty careful with the coin storage aspect.

I'd say that the scammers in the community, at least, are anticipating a downturn in BTC value (or more hopefully, increased competition from legitimate players) and are exiting stage left.  Good bye and good riddance.

This wasn't an EC2 failure. It was an EC2 customer's failure to read the documentation and understand the tools he's using. EC2 by default deletes the volume used to boot the instance after the instance gets stopped. The MySQL database survived because it resided on the separately attached volume which would need to be explicitly deleted.

I spoke with people working in Poland and apparently this was all around amateur hour, including all the futile attempts at recovery. Apparently the bitomat.pl operator even served Amazon with a legal demand using Polish legal process. Also, he didn't incorporate the business and operated it as an after-hours hobby while keeping full-time job at www.ceneo.pl.

More like stolen.

Wouldn't the exchange owner be criminally liable for the losses because of not exercising reasonable care? Has anyone filed a police report?

This is really just the free market in action people. So some coins went "missing" somehow, who knows? Now you know not to deal with any Polish people as they have proven themselves to be slimy scumbags out to ruin bitcoins reputation.  8)

If I were in need of fiat for BTC in the near-ish future, I'd do some trading most ricky-tick before this wave hits the markets.

Come to think of it, I did notice a chunk of around 10k BTC to through MtGox this weekend which out the $13.50 level with ease.  $13.00 even fell briefly.  I wonder it that were these?

Yes, people did report this to the business crime division of Polish police. With regard to his liability this will unlikely be criminal and currently it is treated as a case of safeguarding evidence for a civil case. bitomat.pl didn't charge any fees because it didn't have proper legal framework to do so. Apparently he sustained the expenses by keeping the PLN balance in overnight certificates of deposit. PLN funds weren't lost and both deposits and withdrawals are processed promptly.

Unfortunately you are so right.

This is not the confidence investors, traders and normal people interested in bitcoins need to buy some.

If I heard those failures of the exchanges back in fall 2010, I would not be here now. I would have never entered bitcoins in such an unstable exchange mess.

They try to sell bitomat.pl for 17 000 BTC to give back people their money

You can learn and experiment on EC2 for free: http://aws.amazon.com/free/ . You will then understand why this isn't feasible to shut down EC2 farms to recover somebody's deleted data.

Is it really lost?  Has anyone checked out the blockExplorer to see if the coins have been shifted?  We know that MyBitcoin's stash hasn't been shifted.

No they are still where they were. As I understand the current plan is to convert lost bitcoins into shares of a new for profit venture that will take over managing and operating bitomat.pl. They are planing on introducing transaction fees and use the dividend to pay off the owners of the lost coins.

Apparently new venture is going to be some sort of a merger/takeover using some yet unspecified going concerns from Poland and U.K.

All the above is hearsay, please treat accordingly.

This is unlikely to end well. In addition, there's a good chance of both:

• This actually being a scam and the coins liquidized at some arbitrary point in the future
• An angry investor taking the head of the one responsible

Unless, of course, they have a backing insurance that will cover this? That's the way this is normally done, since the insurance people would probably take the job of investigating and thus securing against theft, while paying those who otherwise have been screwed by the exchange.

Very true... Buttttt, for me I see it as an opportunity to get ready to buy some nice and cheap bitcoins before they rebound :D
There's been a lot of bad events happening recently, but they're just teething stages... All the exchanges at the moment are still very amateur! With banks, if something like this happened, it would be hushed away and nobody would know about it... There's insurances to cover things.

Rumor has it that it isn't the head of the operator that's in danger. Some of the lost BTC apparently belonged to the people who are not above breaking bones or cutting fingers to collect the debts. They cannot afford to let it slide.

Do they shred files when they reboot the machines there or could some lucky bastard running some sort of undeleter actually hit jackpot?

AWS storage is zero-initialized upon allocation.

Criminal negligence in the death of a bitcoin?

Plausible since I consider anyone spilling a beer to be an alcohol abuser.

But, I don't think you can criminalize stupidity, but I'm sure you can make it liable.

I am interested to see how this plays out as well.  The intentions seem in order and the rumored proposed plan would seem to be a best case solution and may have merit insofar as 'rumors' and 'proposed plans' go.

And with that sort of coin you wouldnt have a backup held in a bank vault at least...stupidity never ceases to amaze me...

I'm thinking the backup exists, but is being held in secret, to be liquidated at some (far?) future date.

Perhaps, but these exchanges and wallet sites suddenly going under and Bitcoin being particularly depressed atm is too much of a coincidence. I suspect its more a case of these sites having spent coins they were holding (similar to what fiat banks do) and the owners of the coins are calling on their accounts to withdraw and sell and the money simply doesnt exist anymore to meet all the requests. I doubt would be seeing this picture atm if the value of BTC was $30 or more...

You're forgetting the mysterious vanishing mybitcoin.com.

I also think that some of the problems are stemming from what were effectively hobby businesses which required little time and attention a few months ago now having greatly increased user bases.  Small businesses often don't scale well, especially if they've been forced to scale without preparation - which is pretty much what happened when the price started soaring a few months back.  Things which weren't major issues a few months back now affect a lot of users and there aren't necessarily adequate plans in place to deal with large scale problems.

It's highly possible - perhaps even probable - that these services were under-capitalised to begin with and that their business plans didn't allow for their user bases expanding so dramatically so soon.  If that's the case, things going to hell in a hand basket isn't a "co-incidence" - it's an almost inevitable outcome of poor planning.  Most small businesses ultimately fail and there's no reason to expect that the small businesses which have emerged to service the Bitcoin market are immune to the problems which affect small business in general.  People need to keep that in mind when choosing to place large amounts of money and/or Bitcoins with these services, because some of them will go under.

It can be verified. I urge Bitomat users to keep track of the coins they recently sent to their Bitomat accounts, by monitoring the block chain, and report if there are any ongoing transfer.

Yeah I remember Bruce Wagner not long ago on The Bitcoin Show asking his guest at the time if they knew who was the third largest.

Any sane person would have created an offline backup. So I'm with you, I think it's just an excuse to say that they don't have the BTC.

I sure am glad I learned my lesson after the mt. gox hack and kept my btc offline and in my possession.

 I can provide backup of your wallet on 3 different dedicated server, hosted in 3 different datacenters ( wether you are an individual or an exchange ) .
 For trust concerns you can check my gpg Wot and my otc ratings

 more on my bitcoin services :
http://bitcointalk.org/?topic=1687.0

How could they not even have an old backup copy of their wallet? Even if it was missing some addresses they could get some of their money back. (and why not just create a lifetimes worth of addresses in the wallet and backup that first).
You don't ever need to make more than one backup of a wallet if you have prepared it with enough potential addresses.

True Bitcoin hackers create a small, GPG-encrypted wallet and back it up by embedding it in the block chain itself, globally replicated around the world  8)

The best idea is to pre-generate plenty of addresses, encrypt wallet with AES-256 (7-zip supports it) and store it both at home and in various online places (GMail, file hostings, etc).

How I can instruct bitcoin client to not generate new addresses, but use existing ones? This is what I really do not like about it - not being able to tell when client used new address for change or reused already genereated one.

A big +1 to this. All this recent nonsense is horrible for adoption.

Protip on how to backup wallet: encrypt it then happily upload it in gmail, msn skydrive and every other email or online service you have. Since it's encrypted, no one will steal it. And no way you can lose it, even if some service happily delete your account you still have others. And except that, these online services are very reliable.

I've just created a wallet with 20000 addresses to see what happened (creating a Bitcoin.conf file - copy and pasting from here: https://en.bitcoin.it/wiki/Running_Bitcoin and changing keypool to 20000). It took about half an hour on my computer to create the addresses with a final 14MB Wallet.dat file (about 2.4MB in an encrypted zip).
I think the default 100 addresses is too small and will lead to people losing bitcoins (especially newbies who don't understand that the wallet is actually a set of keys). Any computer can handle a 14MB file - I'm tempted to try it overnight and create 200000 addresses. I doubt I'll ever use that many addresses in my life, and it would still only be an 160mb file.

Is it so hard to make a client that show me the total amount of address in a wallet? And that let me add new address to it? Why i have to mess with text files? Do they think i'm using windows 3.1?

I like (and use) the above technique.  A couple of other suggestions if I may.  These are simply my own personal thoughts on things and I encourage people to think about things and roll their own...avoiding a monoculture is a good thing in my opinion.

--

When encrypting a wallet.dat, do NOT use a password you can remember (unless you are really good at this stuff) and for the love of God, don't forget your password(s).  That means keeping it/them written down in a secure place or several.

If someone is trying to break into an on-line account, there are a limited number of attempts they can try.  If someone has the encrypted wallet.dat file in their possession, they can try at a much higher rate, and with software akin to mining rigs.  So the password should be much better.

(If someone has a password hash from a dump stolen from some web site's database, they can use rainbow tables and other tricks to try to obtain the password.  That is a different beast.)

--

I also suggest re-naming the encrypted wallet.dat to reflect info about it.  e.g., 'wallet.dat__sav-2_20_20110802.enc-1'.  I can see at a glance that this is my second savings wallet, it contains 20 BTC, it was created today, and it uses my '1' encryption scheme.

It sorts nicely with my other savings wallets as well.  I personally keep an active working wallet with spending money and don't bother to back it up at all.  My savings wallets are in cold storage.

On mistake I made was forgetting to properly document the addresses of each savings wallet (so I could check the balances on blockexplorer and make sure all was as expected over time.)  Had to open a bunch of them back up to get it.

--

I also suggest if one is puttering around with command line tools, be most careful indeed to not overwrite or prematurely throw away a wallet.dat, and to double check that the end result can be turned back into a functional wallet.dat file when a technique is decided upon (and documented.)

Most people will want to use a canned tool for such an operation.  Fine, but be careful about where the tool came from and be advised that attackers will know exactly how it works and how to exploit whatever weaknesses it has even if the tool is perfectly legitimate.

--

Lastly, I suggest that deleting a file off a hard drive, pen drive, etc, is not as definitive as a lot of people think.  There could be a whole lot of 'deleted' wallet.dat files to be found if one's HDD is stolen and if the person who is looking is proficient.  There are programs which can securely and reliably nuke a file.  Depending on your risk profile, keep this in mind.

It's actually quite easy to create a complex password that you can remember - just string together a set of other passwords (from facebook, gmail etc) , your mothers maiden name, the year Henry VIII died followed by 6 $ signs and your Autie's name spelt backwards. The important thing is not to type them in. Copy and paste them from a large text document with random letters and symbols (so to avoid key loggers).
Also if you create a large wallet file by creating thousands of addresses it will be less likely that is can be stolen, if you just open it quickly to make a transaction (depending on your upload bandwidth) and then delete it

I don't believe this .

Any person in their right mind wanting to spend 17,000 BTC to buy the third largest exchange's name should put some of that 17,000 BTC towards the construction of a new exchange and have some btc left over after the exchange is complete.

True. Is there a list anywhere that people could add to?

+1

Just for my understanding: Bitomat is still operating as we speak, correct?

I was wondering exactly this. How is it operating if it was destroyed?

I did a translate on the page and they indeed say they are back up.  They are back up with everyone having ZERO BTC.  No accounts I assume as well.  Like a clean slate.   Would you trust them or mybitcoin.com if they came back up?

I can understand (well, I can't really, but I can pretend to understand) not quite understanding how Amazon's instances work. What I can't even begin to understand is having all the coins in one wallet and not having backups of the wallet spread across multiple places. What kind of fucking businesses are these?

I hope that they get their asses sued off in court and all the users recover their money.