Bitcoinica lost 43,554 BTC from Linode compromise, suspicious TXIDs publicized

[cablepair]

i mean seriously, could not this whole thing been prevented if the wallet was just encrypted?

[1713578222]

1713578222

[cypherdoc]

i mean seriously, could not this whole thing been prevented if the wallet was just encrypted?

you would think so 

whats the excuse for not doing this?

[stick_theman]

Wow that's one heck of an attack.  Terribly sorry to hear about the loss but hopefully you can recouperate in some way with the company or community.  

Is Linode like a version of Linux or server software, or just a hosting company such as 1&1, Dreamhost, GoDaddy etc.?  I suppose whether it is Windows, Linux, or Mac, if someone knows what they are doing it doesn't matter what software runs the wallet.  A user could get to the right files if they know.  

Looks like Linode is just a hosting company.  Link: http://en.wikipedia.org/wiki/Linode

I heard from Slush's thread that the Super Admin at Linode can login to any of the virtual server/websites, including Slush's mining pool and Bitcoinica.

I think MtGox should take note... possibly migrate to a non-US server??  

I bet there's a team of people, be it insider or outsider, poppin' toasting champagne right now, as this is a concerted effort to bring down bitcoins.

[zhoutong]

You’re a class act for standing behind your business and accepting the burden of loss yourself.

Your losses can be decreased substantially if you wait to reimburse your clients until after the associated market drop that will follow this event.

+1

but I have to ask, is there something I am missing here, why was this wallet with over $200k worth of bitcoins not encrypted with a strong password?

The root password has been changed via the customer service interface at Linode. The ruby gem we were using to process Bitcoin withdrawals did not support encrypted wallets. We have already migrated to a secure hosting with only intranet incoming access.

[kiba]

Looks like Linode is just a hosting company.  Link: http://en.wikipedia.org/wiki/Linode

I heard from Slush's thread that the Super Admin at Linode can login to any of the virtual server/websites, including Slush's mining pool and Bitcoinica.

I think MtGox should take note... possibly migrate to a non-US server??  

I bet there's a team of people, be it insider or outsider, poppin' toasting champagne right now, as this is a concerted effort to bring down bitcoins.

This doesn't hurt bitcoin. It makes bitcoin stronger. What doesn't kill us makes us stronger, more aware of the danger.

[chrisrico]

i mean seriously, could not this whole thing been prevented if the wallet was just encrypted?

you would think so 

whats the excuse for not doing this?

If payments were automated, it would have to decrypt the keys at some point...

What may have prevented this is multi sig transactions.

[bearbones]

i mean seriously, could not this whole thing been prevented if the wallet was just encrypted?

Obviously the software running against the hot wallet has to have access to it. This means that if someone roots the server, they'll be able to have the same access to the hot wallet. Encryption would not have entered into it.

Zhou, good on you for covering this! I'm having a hard enough time covering the BTCinch theft; I can only imagine how pissed you are at linode.

[kiba]

Obviously the software running against the hot wallet has to have access to it. This means that if someone roots the server, they'll be able to have the same access to the hot wallet. Encryption would not have entered into it.

Zhou, good on you for covering this! I'm having a hard enough time covering the BTCinch theft; I can only imagine how pissed you are at linode.

Zhou could have reduced his loss significantly by reducing the amount of bitcoin that were in the hot wallet. It could be 10,000 bitcoin, for example.

[cablepair]

so basically the problem here is no one was using encrypted wallets because the web apps they were connected to were not compatible

damn what a shame thats a lot of money props to the OP for doing the right thing.

[smickles]

so basically the problem here is no one was using encrypted wallets because the web apps they were connected to were not compatible

yeah... no

[Clipse]

Not trying to heat up the waves but whats the chances the recent dump is related to these coins.

As much as I hate regulation of any kind, I hope Mark can look at the person(s) dumping right now and see if the coins they moved is part of the coins stolen.

[cablepair]

yeah .... no?

explain to me how I am wrong.

[bitcoinBull]

i mean seriously, could not this whole thing been prevented if the wallet was just encrypted?

Obviously the software running against the hot wallet has to have access to it. This means that if someone roots the server, they'll be able to have the same access to the hot wallet. Encryption would not have entered into it.

Zhou, good on you for covering this! I'm having a hard enough time covering the BTCinch theft; I can only imagine how pissed you are at linode.

In this case, encryption would have protected the wallet because the attacker was only able to get root access after a reboot.

[cablepair]

i mean seriously, could not this whole thing been prevented if the wallet was just encrypted?

Obviously the software running against the hot wallet has to have access to it. This means that if someone roots the server, they'll be able to have the same access to the hot wallet. Encryption would not have entered into it.

Zhou, good on you for covering this! I'm having a hard enough time covering the BTCinch theft; I can only imagine how pissed you are at linode.

In this case, encryption would have protected the wallet because the attacker was only able to get root access after a reboot.

thank you.

[drakahn]

so basically the problem here is no one was using encrypted wallets because the web apps they were connected to were not compatible

damn what a shame thats a lot of money props to the OP for doing the right thing.

even if the 'web apps' were compatible, they would need to know the encryption key, so anyone with access would also have the encryption key

[smickles]

yeah .... no?

explain to me how I am wrong.

as was mentioned before, the wallet would have to be decrypted at some point in time to use it, the attacker had root access so they would see the unencrypted wallet. This means that an encrypted wallet would not have help out at all.

[kiba]

In this case, encryption would have protected the wallet because the attacker was only able to get root access after a reboot.

AND mutlisignature

AND low amount of BTC in your hot wallet in case your defense in depth got bypassed.

[smickles]

i mean seriously, could not this whole thing been prevented if the wallet was just encrypted?

Obviously the software running against the hot wallet has to have access to it. This means that if someone roots the server, they'll be able to have the same access to the hot wallet. Encryption would not have entered into it.

Zhou, good on you for covering this! I'm having a hard enough time covering the BTCinch theft; I can only imagine how pissed you are at linode.

In this case, encryption would have protected the wallet because the attacker was only able to get root access after a reboot.

why would a reboot stop the attacker from seeing the wallet being unencrypted during the next use?

[bbit]

In this case, encryption would have protected the wallet because the attacker was only able to get root access after a reboot.

AND mutlisignature

AND low amount of BTC in your hot wallet in case your defense in depth got bypassed.

this ^^

[btc_artist]

i mean seriously, could not this whole thing been prevented if the wallet was just encrypted?

Obviously the software running against the hot wallet has to have access to it. This means that if someone roots the server, they'll be able to have the same access to the hot wallet. Encryption would not have entered into it.

Zhou, good on you for covering this! I'm having a hard enough time covering the BTCinch theft; I can only imagine how pissed you are at linode.

In this case, encryption would have protected the wallet because the attacker was only able to get root access after a reboot.

why would a reboot stop the attacker from seeing the wallet being unencrypted during the next use?

You have to enter the wallet password/passphrase after rebooting/restarting bitcoin.