Bitstamp exchange reopens doors after $5m hack

The Bitcoin exchange is open for business, but extra security processes are now firmly in place.
Written by Charlie Osborne, Contributing Writer
Hacked digital currency exchange Bitstamp has reopened for business following the theft of 19,000 Bitcoins.

The Bitcoin exchange suspended services last week following a security breach which relieved the company of over $5 million in digital currency. Following the closure of once-dominant Bitcoin exchange Mt. Gox in 2013, Bitstamp climbed the ranks to become one of the largest online exchanges in the industry -- and many users began to panic after the firm suddenly suspended trading on January 5.

The day previously, some of Bitstamp's operational wallets were compromised, resulting in the loss of roughly 19,000 BTC. To err on the side of caution, Bitstamp warned its traders to stop making deposits to previously issued deposit addresses, and temporarily suspended services to investigate the theft.

The breach represented a "small fraction of Bitstamp's total bitcoin reserves," according to the executive. Bitstamp maintains that the vast majority of bitcoin held is securely stored in "cold" rather than "hot" wallets --in other words, held offline rather than online to prevent hackers from accessing all customer deposits in the case of a security failure. Bitstamp says that any bitcoins held with the company prior to the service suspension are safe and will be honored.

Bitstamp is now back online, and in a statement on its website Bitstamp CEO Nejc Kodric said the firm is "better than ever."

Addressing the company's customers, Kodric said Bitstamp's security protocols have been revamped, including a newly-deployed website and safer backend systems. The company chose to take itself offline after the security breach in order to rebuild systems from the ground up from a secure backup.

"By redeploying our system from a secure backup onto entirely new hardware, we were able to preserve the evidence for a full forensic investigation of the crime," Kodric says.

"We have also taken this time to implement a number of new security measures and protocols so that customers can resume using Bitstamp with full confidence and trust. While this decision means we have not been able to provide you with services for a number of days, we feel this extra measure of precaution was in the best interest of our customers."

Bitstamp has introduced a number of new security features and upgrades. The company has introduced BitGo multi-sig technology, a completely new hardware infrastructure, and has moved its service to Amazon's AWS cloud infrastructure.

As an apology and thank you to customers, transactions conducted through Bitstamp will be commission-free until January 17th.

Kodric commented:

"While this is a time of challenge for our company, we expect to emerge from this experience having set an even higher bar than before for trust and confidence in our services.

On a personal note, I'd like to thank the incredible teams at Bitstamp and at our lead investor Pantera Capital who have worked around-the-clock from multiple time zones in the last few days. I'm incredibly proud of the herculean work of this extended team, and grateful to the phenomenal show of support from customers, friends, and partners in the bitcoin community."

Bitstamp is said to be the world's third busiest bitcoin exchange amounting for six percent of all bitcoin transactions.

Read on: Cryptocurrency, Bitcoin

Editorial standards