Bitstamp issues statement and temporarily suspends service

[Keyser Soze]

Seems to me those are the funds from the hot wallet: http://www.coindesk.com/bitstamp-claims-roughly-19000-btc-lost-hot-wallet-hack/

On another note, where did this statement come from? Was it made directly to Coindesk at CES maybe?

I've been wondering the same thing, can't find the statement anywhere else.

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[pawel7777]

If they indeed lost ~ 19,000 BTC, they're seriously fucked. There's no way they have enough own reserves to cover it. And I doubt they have insurance covering such event.

[redsn0w]

If they indeed lost ~ 19,000 BTC, they're seriously fucked. There's no way they have enough own reserves to cover it. And I doubt they have insurance covering such event.

They can buy 19k btc with the fiat value , it is not an impossible thing to do....  (and maybe the price will raise a little).

[pawel7777]

If they indeed lost ~ 19,000 BTC, they're seriously fucked. There's no way they have enough own reserves to cover it. And I doubt they have insurance covering such event.

They can buy 19k btc with the fiat value , it is not an impossible thing to do....  (and maybe the price will raise a little).

But I don't think they have ~ $5m reserves to do that. Their latest financial statements (for 2013) showed P&L reserves of ~ $0.8m.

They'd likely need a loan for that, maybe from their shareholder Pantera Investments?

[mike81]

The 19000 BTC isn't even half of the volume that was traded per day the last couple of days. It is a big hit but i suppose it is recoverable.

I'm more worried about the wording in the statement where it states:

We are working to transfer a secure backup of the Bitstamp site onto a new safe environment and will be bringing this online in the coming days. Customers can stay informed via updates on our website, on Twitter (@Bitstamp) and through Bitstamp customer support at support@bitstamp.net."

I don't think it should take days to copy and check their environment, why would it take this long?

And updates haven't been provided since this morning on either Twitter or their website. No source for the last statement on Coindesk. I'm worried we won't hear anything for a few days now. And that reminds me of Gox...

[b!z]

The 19000 BTC isn't even half of the volume that was traded per day the last couple of days. It is a big hit but i suppose it is recoverable.

I'm more worried about the wording in the statement where it states:

We are working to transfer a secure backup of the Bitstamp site onto a new safe environment and will be bringing this online in the coming days. Customers can stay informed via updates on our website, on Twitter (@Bitstamp) and through Bitstamp customer support at support@bitstamp.net."

I don't think it should take days to copy and check their environment, why would it take this long?

And updates haven't been provided since this morning on either Twitter or their website. No source for the last statement on Coindesk. I'm worried we won't hear anything for a few days now. And that reminds me of Gox...

I don't think Bitstamp is going to disappear overnight like Mt. Gox. They've got a lot to lose.

The company has generally been respected within the bitcoin community. In May 2014 it passed a proof-of-bitcoin-reserves audit overseen by BitcoinJ developer Mike Hearn, and in June it beat other bitcoin companies to win the Europas' Best Virtual Currency Startup Award.

[mike81]

I don't think Bitstamp is going to disappear overnight like Mt. Gox. They've got a lot to lose.

The company has generally been respected within the bitcoin community. In May 2014 it passed a proof-of-bitcoin-reserves audit overseen by BitcoinJ developer Mike Hearn, and in June it beat other bitcoin companies to win the Europas' Best Virtual Currency Startup Award.

A lesson learned from the whole Mt.Gox debacle is that they need to keep communicating. This doesn't seem to be a priority at the moment. I'm still wondering where that statement on coindesk came from. It isn't on their website or twitter. So how would customers know (apart from reading coindesk).

Having said that I don't think they'll go bust because of this. I've been using them since long before Mt.Gox started to slide and they've proven to be a reputable exchange.

[smoothie]

I don't think Bitstamp is going to disappear overnight like Mt. Gox. They've got a lot to lose.

The company has generally been respected within the bitcoin community. In May 2014 it passed a proof-of-bitcoin-reserves audit overseen by BitcoinJ developer Mike Hearn, and in June it beat other bitcoin companies to win the Europas' Best Virtual Currency Startup Award.

A lesson learned from the whole Mt.Gox debacle is that they need to keep communicating. This doesn't seem to be a priority at the moment. I'm still wondering where that statement on coindesk came from. It isn't on their website or twitter. So how would customers know (apart from reading coindesk).

Having said that I don't think they'll go bust because of this. I've been using them since long before Mt.Gox started to slide and they've proven to be a reputable exchange.

That is how it works....they appear reputable until they aren't. Just like someone isn't a scammer until they scam...by then it is too late.

You can't see the future so my personal outlook is to be very skeptical on everything they claim until they show their hand fully.

[smoothie]

The 19000 BTC isn't even half of the volume that was traded per day the last couple of days. It is a big hit but i suppose it is recoverable.

I'm more worried about the wording in the statement where it states:

We are working to transfer a secure backup of the Bitstamp site onto a new safe environment and will be bringing this online in the coming days. Customers can stay informed via updates on our website, on Twitter (@Bitstamp) and through Bitstamp customer support at support@bitstamp.net."

I don't think it should take days to copy and check their environment, why would it take this long?

And updates haven't been provided since this morning on either Twitter or their website. No source for the last statement on Coindesk. I'm worried we won't hear anything for a few days now. And that reminds me of Gox...

The big question is will they allow a run on Bitcoin and fiat withdraws?

Anyone who has a large sum trapped there would likely want out ASAP.

If they allow this and bite the bullet I will give them credit where it is due. Otherwise they are insolvent.

[OhShei8e]

Statement Update:

January 6, 2015, 12:34am UTC: We have temporarily suspended Bitstamp services. Bitstamp customers can rest assured that their bitcoins held with us prior to temporary suspension of services on January 5th (at 9am UTC) are completely safe and will be honored in full.
On January 4th, some of Bitstamp’s operational wallets were compromised, resulting in a loss of less than 19,000 BTC. Upon learning of the breach, we immediately notified all customers that they should no longer make deposits to previously issued bitcoin deposit addresses. To repeat, customers should NOT make any deposits to previously issued bitcoin deposit addresses. As an additional security measure, we suspended our systems while we fully investigate the incident and actively engage with law enforcement officials.
This breach represents a small fraction of Bitstamp’s total bitcoin reserves, the overwhelming majority of which are held in secure offline cold storage systems. We would like to reassure all Bitstamp customers that their balances held prior to our temporary suspension of services will not be affected and will be honored in full.
We appreciate customers’ patience during this disruption of services. We are working to transfer a secure backup of the Bitstamp site onto a new safe environment and will be bringing this online in the coming days. Customers can stay informed via updates on our website, on Twitter (@Bitstamp) and through Bitstamp customer support at support@bitstamp.net.
- Bitstamp Team

https://www.bitstamp.net/

More than one wallet was compromised. Nearly 19,000 BTC lost.

[RealMalatesta]

The 19000 BTC isn't even half of the volume that was traded per day the last couple of days. It is a big hit but i suppose it is recoverable.

I'm more worried about the wording in the statement where it states:

We are working to transfer a secure backup of the Bitstamp site onto a new safe environment and will be bringing this online in the coming days. Customers can stay informed via updates on our website, on Twitter (@Bitstamp) and through Bitstamp customer support at support@bitstamp.net."

I don't think it should take days to copy and check their environment, why would it take this long?

And updates haven't been provided since this morning on either Twitter or their website. No source for the last statement on Coindesk. I'm worried we won't hear anything for a few days now. And that reminds me of Gox...

Naugh, this takes time if they don't know yet the mechanism how someone got into the system.

[mayax]

I don't think Bitstamp is going to disappear overnight like Mt. Gox. They've got a lot to lose.

The company has generally been respected within the bitcoin community. In May 2014 it passed a proof-of-bitcoin-reserves audit overseen by BitcoinJ developer Mike Hearn, and in June it beat other bitcoin companies to win the Europas' Best Virtual Currency Startup Award.

A lesson learned from the whole Mt.Gox debacle is that they need to keep communicating. This doesn't seem to be a priority at the moment. I'm still wondering where that statement on coindesk came from. It isn't on their website or twitter. So how would customers know (apart from reading coindesk).

Having said that I don't think they'll go bust because of this. I've been using them since long before Mt.Gox started to slide and they've proven to be a reputable exchange.

Coindesk are as bad as mainstream media channels these days and had at least one outright BS article lately, this ones pushing ripple so wouldn't be surprised if there's FUD in there. Getting hard to get good news these days, this forums spammed by astroturfers and there's a lot of FUD on the popular news channels, especially the forex coverage. Hope when they've something to say its something good but the biggest scumbags on the planet are fighting back now so the only thing certain is coins you have the keys for.

what good news do you want? 50% fake transactions. the big exchangers are manipulating the price along with the Bitcoin Foundation, the exchangers are earning millions when the Bitcoin price is going down....this is the Bitcoin world; full of speculators and this how it will be from now on...I am not sure for how long...
there are not too many NEW fouls to "invest"

[GGGGG]

I don't think Bitstamp is going to disappear overnight like Mt. Gox. They've got a lot to lose.

The company has generally been respected within the bitcoin community. In May 2014 it passed a proof-of-bitcoin-reserves audit overseen by BitcoinJ developer Mike Hearn, and in June it beat other bitcoin companies to win the Europas' Best Virtual Currency Startup Award.

A lesson learned from the whole Mt.Gox debacle is that they need to keep communicating. This doesn't seem to be a priority at the moment. I'm still wondering where that statement on coindesk came from. It isn't on their website or twitter. So how would customers know (apart from reading coindesk).

Having said that I don't think they'll go bust because of this. I've been using them since long before Mt.Gox started to slide and they've proven to be a reputable exchange.

Coindesk are as bad as mainstream media channels these days and had at least one outright BS article lately, this ones pushing ripple so wouldn't be surprised if there's FUD in there. Getting hard to get good news these days, this forums spammed by astroturfers and there's a lot of FUD on the popular news channels, especially the forex coverage. Hope when they've something to say its something good but the biggest scumbags on the planet are fighting back now so the only thing certain is coins you have the keys for.

what good news do you want? 50% fake transactions. the big exchangers are manipulating the price along with the Bitcoin Foundation, the exchangers are earning millions when the Bitcoin price is going down....this is the Bitcoin world; full of speculators and this how it will be from now on...I am not sure for how long...
there are not too many NEW fouls to "invest"

Exchangers earn very good on short-term price movements, but in the long-term downtrend "buy positions" secure only 70%-80% from the supply, in reality it' a sluggish bloodsucking.

[smoothie]

If they indeed lost ~ 19,000 BTC, they're seriously fucked. There's no way they have enough own reserves to cover it. And I doubt they have insurance covering such event.

They can buy 19k btc with the fiat value , it is not an impossible thing to do....  (and maybe the price will raise a little).

So you are assuming they have $5million laying around of their own funds to do this?

I doubt it.

[RGBKey]

Goddamnit, not again.

[rz20]

I hope they come back soon

[R2Pleasent]

If they indeed lost ~ 19,000 BTC, they're seriously fucked. There's no way they have enough own reserves to cover it. And I doubt they have insurance covering such event.

They can buy 19k btc with the fiat value , it is not an impossible thing to do....  (and maybe the price will raise a little).

So you are assuming they have $5million laying around of their own funds to do this?

I doubt it.

Let's assume that Bitstamp was audited by Pantera in March 2014 before they invested $10M venture capital into the company.  Considering this was done shortly after the MTGOX debacle, I think it's safe to assume anyone dropping a $10M investment into a bitcoin exchange requested a verified and substantial financial audit of the company.

If they have been running a legitimate 100%+ reserve since that investment was made, they can likely weather the storm.

[smoothie]

If they indeed lost ~ 19,000 BTC, they're seriously fucked. There's no way they have enough own reserves to cover it. And I doubt they have insurance covering such event.

They can buy 19k btc with the fiat value , it is not an impossible thing to do....  (and maybe the price will raise a little).

So you are assuming they have $5million laying around of their own funds to do this?

I doubt it.

Let's assume that Bitstamp was audited by Pantera in March 2014 before they invested $10M venture capital into the company.  Considering this was done shortly after the MTGOX debacle, I think it's safe to assume anyone dropping a $10M investment into a bitcoin exchange requested a verified and substantial financial audit of the company.

If they have been running a legitimate 100%+ reserve since that investment was made, they can likely weather the storm.

Time will tell.

Assuming they had a 10,000 BTC per day trading volume that turns into 40 BTC in trade fees per day...

For 1 year (365 days) that is 14600 BTC. That would be their entire yearly profit from fees.

They lost 18000+ BTC in one fell swoop.

Not sure if I would think they have enough reserves in profit even if it were 20,000 btc per day trade volume (which is way over estimating).

The past 365 days of bitstamp trading daily volumes/price.

http://bitcoincharts.com/charts/bitstampUSD#rg360ztgSzm1g10zm2g25zv

Looks like 10k BTC per day is a nice reasonable number to assume is their average daily volume traded.

Based on those numbers I do not believe they have enough to cover said losses in full. Remember now they have expenses over that year.

[Nagle]

So you are assuming they have $5million laying around of their own funds to do this?

I doubt it.

That, indeed, is the problem. They have to come up with $5 million to reopen.

They can't reopen without the money. If and when they allow withdrawals again, everybody is going to take their money and Bitcoins out. If they try to pull some of the stunts Gox pulled about stalling withdrawals, this thing will come unglued even faster.

Bitstamp is a UK company. UK bankruptcy laws are much more pro-creditor than US or Japan bankruptcy laws. As soon as a company owes you money and isn't paying its debts, you can file a "statutory demand"  The company has only 21 days to pay before you get to go to court to have them forced into liquidation.

Any creditor of Bitstamp can do this. Tomorrow morning, if they want.

There's also a UK court procedure for a "money claim", for amounts up to £100,000. This is only available if you have an address in the UK. That can be done on-line. You have to send a letter demanding payment first, but you only have to wait 14 days before filing a money claim.

Don't wait. That didn't work out with Mt. Gox.

[smoothie]

So you are assuming they have $5million laying around of their own funds to do this?

I doubt it.

That, indeed, is the problem. They have to come up with $5 million to reopen.

They can't reopen without the money. If and when they allow withdrawals again, everybody is going to take their money and Bitcoins out. If they try to pull some of the stunts Gox pulled about stalling withdrawals, this thing will come unglued even faster.

Bitstamp is a UK company. UK bankruptcy laws are much more pro-creditor than US or Japan bankruptcy laws. As soon as a company owes you money and isn't paying its debts, you can file a "statutory demand"  The company has only 21 days to pay before you get to go to court to have them forced into liquidation.

Any creditor of Bitstamp can do this. Tomorrow morning, if they want.

There's also a UK court procedure for a "money claim", for amounts up to £100,000. This is only available if you have an address in the UK. That can be done on-line. You have to send a letter demanding payment first, but you only have to wait 14 days before filing a money claim.

Don't wait. That didn't work out with Mt. Gox.

Interesting. Thanks for sharing that information.

Good to see the UK have much better laws for the consumers/customer's benefit in place.