Bitcoin Forum

A lot of people are saying that this is the end of Bitstamp. That they've been goxed and that any bitcoins held on the site are now gone. This isn't true. Bitstamp WILL easily recover from this hack. It sucks that this happened, but this isn't really a huge disaster and it should by no means affect the survivability of the company.

On the 5th of January, Bitstamp lost 18,000 BTC from a 200,000 BTC reserve. That's about 9% of the total reserve.

Percentage-wise, this is very similar to the hack that Poloniex suffered in 2014. It lost 12% of its bitcoins due to a technical glitch which was exploited by a hacker. That exchange was able to recover its reserves in just mere months. It has enjoyed a spotless security record since then.

In August 2014, Bter also lost 50 million NXT worth about $1.6 million due to a hacker. After a while, they were eventually able to recover 42 million NXT making their net loss 8 million NXT and a couple hundred BTC which they sold to the hacker for bargain prices in exchange for the return of the bulk of the stolen NXT. Today, they're still operating perfectly fine.

Bitstamp has had $10 million injected into it from venture capitalist/hedge fund firm Pantera. So as a last resort, they could use this money to refund its customers. Bitstamp earns millions of dollars every year from trading fees. The majority of their coins are held in cold storage. Mike Hearn, a trusted Bitcoin dev audited their BTC reserves several months ago and confirmed that everything looked OK. The fact that only 9 percent of all funds were stolen means that the security benefits of separating hot and cold wallets is working. Services like MyBitcoin, inputs.io, and Mt. Gox that failed to properly separate the two have seen the majority of their funds disappear. From the look of this hacking incident, it is clear that Bitstamp is not making the same mistake.

TL:DR; Your deposits are safe. There is no need to worry.

While ultimately I think they will recover just fine, Panterra's boss has made it known that he's distancing himself to BitStamp and I doubt Stamp will find it easy to get any more VC money. They obviously don't need it at this point especially if they come through and cover their customers' losses, if in fact they were actually losses and not a company loss.

Where is that annoucement?

If so, DAN MOREHEAD will drag down Ripple which is related with him too.

Ripple will go down along with Bitstamp.

Also, is well-knowm that Bistamp processed orders for Coinbase and Bifinex just to named 2 of the biggest exchangers. There many other small exchangers affected.

question is: will they be able to survive a withdraw run after they open? And will people keep trading on Stamp, so they can get profits to pay the losses?

Before the hack they had around 100% of reserves, now they have only about 90%. If they are not hiding other losses

i agree.  and honestly, i was hoping bitstamp has little BTC in their reserves but way more fiat. that way, when customers panic withdraw when it reopens, bitstamp will have to buy BTC to process withdrawals.  ;D

Not so easy I think

that reserve includes the bitcoins owned by users,not their bitcoins.

Some calculations say that 18k bitcoins are aproximately 8 months of fees.

And from now on they will have fewer volume for sure.

It will take many time to recover this

by ripple, you mean XRP?  maybe it will (in terms of price).

but the ripple platform/network will never go down just cos one ripple gateway was hacked.

the question is, how much reserves does bitstamp have in fiat.

we are monotoring the situation, they look unprepared and all exchanges should have plan B ready for their customers in these events

unprepared?  that's not good. :(

imo, the first thing they should do is at least make sure they have enough BTC for withdrawals just in case people panic withdraw. 

Why did Stamp shut down all fiat withdrawals, if this was just a "bitcoin hack"?  :D  ::)

I think this is the key point.  Stamp is not going to disappear and the poloniex analogy is good one.  However, 18K coins is a lot to make up over time via fees.

not going to disappear but is certainly a huge dent in their cash reserves and reputation. There are a few well backed western exchanges currently lacking customers that will try to soak up current bitstamp's customers. Other than their liquidity and reputation of being here for a long time, I don't see it has other advantages over other exchanges.

what other exchanges are there?  time to find a new home.

2015 is the year of the decentralized exchange...

The Worlds First Decentralized Exchange
http://bytemaster.bitshares.org/article/2015/01/07/The-Worlds-First-Decentalized-Exchange/

The Future of Crypto Currency Exchanges
http://bytemaster.bitshares.org/article/2015/01/05/The-Future-of-Crypto-Currency-Exchanges/

Bitstamp hack was an inside job, same as Mt gox

Everyone is way too optimistic, I don't think they will even re-launch

inside job by ceo?
mt gox was more or less all controlled by ceo, but bitstamp have a lot more stakeholders, so if it's an inside job then it probably is one of the employees.

this is bad news for bitcoin , but i believe they will come back soon .

Well I don't have any coins on Stamp but after some mintpal taking my altcoins I would probably be part of that bank run myself
Will need to wait and see on this

Blue:  If most people do not withdraw all at once or demand full withdrawals be put into place then maybe (likely not).

Red:  I see most people not trading on bitstamp anymore. I know I will not be. This will decrease their daily volume and their daily revenue due to fees.

Bitstamp has a long road ahead of them that I honestly do not see them getting out of easily.

That is what I would like an answer to. There should be no directly linked reason to the btc hack that involves USD/fiat wires being halted.

Another big red flag.

It already said it will. I am just waiting for their comeback.  I wonder if price will be affected by the comeback, even though nothing is expected.

That's the big question. It's very suspicious that Bitstamp is evading answering it.

It's also a concern that Bitstamp's replies, on Twitter and on their own site, are increasingly vague about when they will be back up.

If they try to bring trading back up while limiting withdrawals, assume they're crooks.

Of course since Bitstamp is very big exchange site
No wonder they can recover in less than a week

But, i'm sure some people never trading at Bitstamp again :(

possible. most multi-million dollar heists in history are inside jobs.  i'm not saying the bitstamp hack is, but it is something to consider and think about.

edit:  i'm pretty sure law enforcement officers are investigating bitstamp employees too.

after such incidents the price will go down again and again and confidence too in btc world..that's a pity..

That the worst scenario will happen when big company got hacked or shut down. Many new investor will hesitate to invest using this digital currency which have many bad news

That is really getting boring. The price went up, since the incident.
Nobody cares, who doesn't have funds on Bitstamp and business goes like usual. The times where hacking one Exchange can crush the BTC-price are over.

I'm just hoping this is not another not this shit again case where we get some giant drama brewing in the background
We have had a lot of exchanges shut down to repeat the 2011 2012 ones (instawallet etc) + Gox and mintpal it feels like we are repeating time all over again.
In other words if their is a hydra and they keep doing the same thing and getting away with it they need to get their heads cut off now before we see more repeats (Ryan Kennedy)

I hope what is more important is that after the incident at least they know where the loopholes are and have taken the measures to upgrade their security. Also, what I'm interested is how the coins get lost to the attacker? SQL injection, I'm not sure... but certainly it's not that easy to get hacked in the first place.

I doubt they were making anywhere near the 19k BTC to cover the loss.
Its not a big problem there are other exchanges and more will be coming up. Unlike Gox which at some point held 80% of al the trades, Bitstamp was another exchange.

hence making the inside job angle very very possible.

They better hope customers keep faith and stick with them, will be interesting to see on bitcoinity their market share over next month.

I don't think the recovery will be that easy plus the people lost a little faith in them and would want to avoid keeping their funds there to trade.

your numbers maybe  wrong ,according to another thread their cold wallet has roughly 130k coins

regardless of what they have in the cold wallet,

5.2 million usd  of uninsured deposits is a lot to cover  and the first suggestion i would have is its an inside job like gox ,mintpal and practically all the others

seems to happens every exchange when they start doing high volume .............(like retirement for life kinda money )

I think a lot of you are overly optimistic and downplaying this.

5 million dollars is a huge amount to cover out of pocket unless they were making insane amounts of yearly revenue off fees.

I've seen this play out one too many times in the past.

I hate to think it, but I'm anticipating another 'we're investigating' excuse for a few more weeks or possibly even months while they halt withdrawls and lead customers on.  When in fact it's an inside job and they know damn well they're just buying time.

As stated before, they know everyone will be in a rush to withdraw their funds, and their trade volume will go significantly down as they lose customers. 

TLDR: 

-Current customers panic and want to pull out funds immediately
-Bitstamp issues BS excuses saying their still investigating...keep halting withdrawls for months trying to buy time
-Lose significant trade volume and new customers, resulting in very little fees to pay back any losses
-Issue a 'we're insolvent' message a month or two down the road
-Everyone losses their shit...CEO moves to the bahamas

New exchange launched.  Repeat cycle.

Kind of wonder if its possible to just start a witch hunt early sometimes
Before the dust settles and everything is cleared act first and think later but then again it's probably because I'm getting a tad to cynical about exchange crashes witnessing more than a few myself.
Still hoping everything resolves well though.

I guess a potential vision of what Bitstamp is like 6 months down the road is vircurex.com  ::)


... diehards and tumbleweeds...


They are supposedly paying back lost funds from fees, but they've done absolutely nothing to promote or improve the place to be an attractive exchange in the now, so there's very little action and very little fees to refund from.

Yah vircurex hasn't made a balance payment since August 20th 2014
It's been a good six months
Funny thing about that exchange is that it still advertises interest on deposits when it owes people deposits lol.

Not quite. Tristan made a 12% (or so) across-the-board deduction of every account with a BTC balance.
Repayments were then made weekly for a few months.
And I seem to remember another hack there involving Counterparty by a Brazilian hotel cleaner, IIRC.


Stamp is mirroring its whole system to a location in San Francisco. I don't know if this is for auditing, a redundancy measure or a prelude to a move from Slovenia.
But it involves the entire system, not just the Bitcoin infrastructure. The process was estimated to take between 24-48 hours.

Stamp initially thought it was a server-related issue, and did not immediately react to the situation. Investigations, with the involvement of local LEAs, are underway.


Interestingly though, the thieves were very generous to miners. In this tx (https://blockchain.info/tx/07a78d55fc17a2809e031116e71ac63faa6c2ea9e29480b4fa59031683b506b8), the fee is 1 BTC.

You have a point, but Stamp's financial health looks okay as of the last published auditing cycle: http://companycheck.co.uk/company/08157033/BITSTAMP-LIMITED/company-summary

That's quite impressive, but I'm guessing those total figures are mostly comprised by the sum of the customer coins held.  I'd be interested to know their actual revenue figures from the past 2 years after employee/server/maintenance costs.

The question is...do they really have the integrity to stick with this and be willing to work basically free of charge and at a personal cost loss for the next few months, if not years...just to pay back the stolen funds?  My gut tells me no...which is why this scenario almost always plays out the same way. Whether or not this was an inside job, from a logical perspective there are very few business owners that would be willing to take that kind of hit, especially knowing it's already a sinking ship.

It's like people with burried with outrageous personal debts with a meager job salary.  That's why filing for bankruptcy is such a common practice nowadays especially in the current financial climate.

I don't know if Bitstamp will easily recover from this hack, not actually the right word to use.

It will take some time, to repair the customers trust, basically operating at a loss trying to cover the theft, and hopefully sustain long enough to regain liquidity over time.

Step 1 is reopening and making sure customers wallets are secured.  Everything after that is gravy, including worst case filing for bankruptsy.

According to the Bitstamp financial statement, the 2013 profit was around of 800,000 USD. Even they hide all the figures, let's say 2 mil usd profit/year. It's too less to cover the loss.
5 MIL USD are a lot of money. 500K are a lot of money but 5 MIL is huge :)

Bistamp will drag down Ripple with them. Take the popcorn and look to the show that it will come soon. :)

They may be big but not big enough to recover from a 5.2 million loss (if it was a real hack )

customer trust will be non-existant after this so even if they worked for free
for the next few years (which they probably wont or cant )  the fees would be so low it would take forever to recover this loss

(if they cant protect their own coins/money  ,im not trusting them to protect mine etc  )

communication has been pretty bad apart from the odd tweet telling people not to worry when we need a bit more than that
they wont even comment on the exact total of coins in storage etc

far easier to claim bankrupt ,blame the hacker and retire with the loot (if they have it )

 or open again under a different name and start again fresh and free from debts and obligations

you mean ripple the platform...?  nope, that will never happen.  bitstamp is just a gateway as far as the ripple network is concerned.  the price of XRP could go down tho, that i give you.

I agree with you.
They lost their credibility in the bitcoin world and credibility is everything in money business!
They may have no other choice but to start again, under new name or as completely different company.

If bitcoin price goes down, they will easily recover the loss in a couple of months, however if the price keeps going up, then they would need to operate in fractional reserve mode for a very long time

Yes they're

Look at price of bitcoin now

If there is a bank run on stamp they might not..  IMO the longer they wait to open the more intense the run will be.

who will ever  agree to put their btc in a fractional reserve system ??
especially one thats already been negligent enough to be hacked for millions of dollars worth

i want my btc instantly when i press the withdraw button or at least know its available when i want it back
and not involved in some fractional system  that doesnt even have enough balance to break even ...............

short off a miracle ,i think the writing is on the wall for bitstamp ,even if they repaid everyone ,the trust is gone .......

well i dont know if this will be the end of Bitstamp but for sure, if they want to come back, will be hard for them, just ask yourselft if they be able to survive a withdraw run after they open, hard, this will be hard for them.

Some people compare what happend to them with polo, but never forget that is a different situation, who know how is going on with bitstamp? why do you think they will recover as polo did? im not sure about that... different companys, different situations...

Btw about his "hack" i really think this was a internal job, same as mtgox, but is only a feeling :P

Bitstamp is related-interconnected with Ripple;same gang. One of the Bitstamp's directors (Morehead) is owning Ripple. :)

This is part of the problem for exchanges.  People want their money instantly when they hit withdraw.  Meaning they need large sums in their hot wallet.  Its generally the hot wallet that gets hacked.

Vicious circle as traders will flock to the most insecure exchanges who have large hot wallets and when said exchanges get hacked the damage is much greater

In the short term I agree with you. But in the mid term less fiat will arrive, new customers will be scary to deposit there. So, it will hurt bitcoin price slowly.

easily? Nope. Looks like more delays and excuses.  ::)

18000 BTC is not chump change - how many days of trading it takes to recover the loss?

Secondly, people will lose confidence and go to other exchanges and their market share isn't that big to begin with.

Other than doing something very drastic like no fee or 0.05% fee, I see them be relegated into irrelevance.

the problem is not the recovery

the problem is the security breach..

how so?

recovery is being able to have enough funds to cover a $5million loss.

Assuming they have a large fiat amount stashed somewhere to buy cheap coins and people are willing to sell really low?

Maybe....but unlikely.

I still ask why they can't verify how much bitcoin's they have in their possession.

The signed message should not take more than a few minutes to generate for the wallet/addresses they own.

No excuse.

Worst case is that the hack was far larger than they thought or they are busy preparing to run away like Mtgox did.
Another speculation is that the venture capital left the table with the money and now they are in a liquidity crisis
Enter shutdown since they don't want to operate for free even though its their fault for not having sufficient security precautions.

they had around of 40 MIL USD in their bank account. if the " the venture capital " left the table, they did it with their 10 MIL invested and maybe a little profit.

the money from their bank is all it counts. call their bank, ask your money bank.
you won't be able to take them from an empty account.

IN before hack larger then they thought and running away like gox after making statement that they will forge away the bad memories of gox fucking clowns.  Probably where bernie madoffing all along and caught up to them . THe delay with no proof to substantiate any claims they are making is ominous. THey could well be insolvent and the hack just a convenient excuse. Hack was money sent into their offshore accounts .

Time for the ole mallibillity excsue

Well unlike the Gox case this time around there is no dedicated British man in front of Bitstamp and their headquarters demanding to contact the CEO of the company to acquire their bitcoins

That was a pair of dudes who would not go down without putting up a good fight.

While the lack of a new ETA is disturbing to say the least, I am happy that they are now in the USA and not hiding out in Tokyo....

He is still listed as a director there.

The connection was interrupted

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The site claims to be coming back up. Current message:

"Bitstamp is open for business!
Thank you for your patience during our temporary disruption of services. We are very happy to officially be back up to serve you. Trading will resume at 21:00 UTC January 9th.
Click here for a message from our CEO."

Login is again available.  Someone please try a withdrawal and see if that works. Thanks.

Indeed.  Good news no matter if price goes up or down.

4PM Eastern is estimated re-launch time for Bitstamp.

OP was right, seems to be going smoothly now. I hope

seems like they can continue ,the only question is whether thyre doing it in fractional reserve style or they
have an excess of coins of cover everyone if necessary ..........

so is bitstamp going to go down like mt.gox?

Well its operational for now I'm keeping a watch on it though for a bit, I appreciate this sentiment but zero fee trading on gox led to withdraw issues later.

* As a note of thanks to our loyal customers, all transactions conducted on Bitstamp through the end of the North American Bitcoin Conference -- January 17th (at 11:59pm UTC) -- will be commission-free.

Looks like I`ll be buying on coinbase until bitstamp gets recovered, and shit taken care of..

check bitstamp again, seems it's working without any interrupions

Coinbase is related with Bistamp.

Bistamp is processing the Coinbase's transactions

I always thought that coinbase is big enough to have their own large pool of bitcoin, not to rely on an exchange.

I guess I`m wrong lol. As for the bitstamp comments, I personally think even though they been hacked, they should be able to come back from this. This is a bit different then the whole mt.gox nonsense back in 2013.

When they were doing the so called phantom deposits, and manipulating the price.

The price is manipulated anyway. The big exchangers are like a gang.
Regarding to Bistamp...they didn't have so much Bitcoin as Mt Gox. :)

Glad to see the resiliency of Bitcoin, amongst this potentially devastating wallet theft done at Bitstamp.

Just goes to show you the maturity and growing pains BTC is going through.  A year ago, "Bitcoin died" when Gox got hacked.  A year later, "Bitcoin" only had a minor setup, when the 2nd biggest exchange got hacked.

This is only good news for this burgeoning cryptocurrency, and shows that overall, Bitcoin is going in the right path.