Is Bitcoin safe yet? BTER Exchange loses $1,75 million in cold wallet hack, ceases operations & suspends withdrawals


The perception of Bitcoin by the investing public, government authorities and the financial markets establishment turned full circle in 2014, attracting the attention of mainstream venture capital investors which funded the implementation of Bitcoin exchanges and ATMs across the US, Switzerland, UK, Canada, Israel and Japan with the full backing of the respective governments.

This contrasted 2013’s events, which included the seizure of Silk Road and the arrest of its founder, rapidly varying Bitcoin values and at the beginning of 2014 the demise of MtGox due to the loss of Bitcoins, which left investors without any recourse.

Bitcoin proponents, which now include large financial institutions, investment houses, government departments, technology firms and exchanges whose innovations are attracting large scale funding, the most notable being CoinBase’s $75 million investment last month, are now enjoying a period of security as the entire industry progresses.

Security issues are a thing of the past due to regulatory oversight, and highly advanced iris recognition systems for accessing e-wallets.

… Or are they?

Yesterday, it was made clear that the security of cold storage wallets (offline storage of Bitcoins) is still a potential liability, as digital currency exchange BTER announced that it had lost 7,170 Bitcoins, worth $1.75 million, as a result of a hack on its cold wallet system.

BTER Exchange, based in China, a region in which Bitcoin has increased in popularity due to the country’s capital control laws, has closed down its platform after the attack and has temporarily suspended withdrawals.

BTER posted on its website that a security check was being conducted, and that the exchange would be temporarily suspended prior to another update, however the circumstances which surround the supposed hack are currently unclear.

According to a report by CoinDesk, BTER says it is offering a 720 BTC bounty “for chasing it back”, although the company did not elaborate on the exact nature of the bounty. CoinDesk has reached out to BTER for comment on the hack but did not receive an immediate reply.

Previously, BTER Exchange was the subject of a hacking event which affected its servers which resulted in $1.65 million worth of NXT was stolen, however at that time, which was several months ago, the exchange was able to negotiate for a partial return of the funds.

By its very nature, Bitcoin is a global, borderless digital currency, although it appears that its systems are not infallable, however in free market nations such as the United States, investors are nowadays well protected due to the licensing which Bitcoin firms are required to operate under, however in other regions, clearly investors are exposed to greater risks.

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Is Bitcoin safe yet? BTER Exchange loses $1,75 million in cold wallet hack, ceases operations & suspends withdrawals

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