Bitcoin Auction Site Puts Itself Up for Sale After Theft of 15 Bitcoins
Published on November 21, 2013 at 18:10 BST
Another day, another bitcoin-related story of a hacking intrusion and BTC theft.
According to people that have provided documentation to CoinDesk, as well as information posted on the Bitcointalk forum, the auction site Bitmit had 15 BTC stolen, after the server was accessed by an employee of their hosting company without authorization.
This theft, along with the effort and responsibility of securing an auction site that has escrow functionality, were the two largest factors in Bitmit announcing that it is being sold.
And although 15 BTC does not sound like a large number, at current CoinDesk Bitcoin Price Index (BPI) values, that's almost $10,000.
Bitmit, known as the 'eBay of bitcoin', has had a string of setbacks since its inception. After the theft the site has remained online, albeit with the header "Bitmit is going to be sold. Please complete your orders and withdraw your funds asap!"
"We are planning to let another company take over Bitmit. Meanwhile we deactivated the site to let you withdraw your funds & complete your orders. The chances are good that Bitmit will be continued."
The scams and frauds that have cropped up around bitcoin as a new type of monetary technology have been numerous. Earlier this week, members of the US Senate held hearings regarding the risks that decentralized virtual currencies pose to the financial system.
Bitcoin-based auction sites like Bitmit often take escrow payments and hold the funds until an item arrives. And although escrow could become a big part of bitcoin being a reliable system of payment, the currency's unregulated nature makes it a somewhat risky proposition.
"Neither Bitmit nor any of the new bitcoin auction sites should be trusted to hold the escrow funds of their users," said Michael McNeff, owner of new auction site Half Price Digital. Half Price Digital does not provide escrow services and could gain market share after Bitmit's closure.
"The new auction sites will either be hacked, shut down for not having an escrow license, the nameless owners will abscond with their users' bitcoins, or the owners will sell the site (and their users' BTC) possibly without their users' knowledge to another party," McNeff said.
The business of bitcoin hacking and theft continues to thrive. Just recently, a Polish bitcoin/litecoin exchange was hacked, and wallets were subsequently emptied. And Slovenia-based Bitstamp, ranked third in the world by bitcoin trading volume according to Bitcoincharts, has experienced issues which crippled trades.
After the the regulatory hot potato was raised at the virtual currency hearing at the US Senate this week, could bitcoin escrow services be next in line for licensing? McNeff stresses those transacting in bitcoin using escrow should be wary, at least for the time being, unless there is some licensing involved.
"None of the other bitcoin auction sites have a legitimate registered company and the reason for this is simple: they are all running unlicensed escrow services which make them a prime target for hackers and risk being shut down by regulators."
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