Hackers steal $64 million from cryptocurrency firm NiceHash

(Reuters) – Slovenian cryptocurrency mining marketplace NiceHash said it lost nearly $64 million in a hack of its payment system, the latest incident to highlight the risks that uneven oversight and security procedures pose to digital currencies such as bitcoin.

FILE PHOTO – A notice announcing that service is unavailable is displayed on the website of Slovenian cryptocurrency mining firm NiceHash, which said it had suffered a hack of its Bitcoin wallet, in photo illustration December 7, 2017. REUTERS/Chris Helgren

NiceHash marketing executive Andrej P. Škraba told Reuters that his firm was the victim of “a highly professional” heist that yielded about 4,700 bitcoin, worth around $64 million at current prices.

The company said it was investigating the cause of the breach on Thursday as bitcoin surged above $15,000 for the first time, adding more than $2,000 to its price in 12 hours ahead of this weekend’s launch of bitcoin futures by CBOE.

Bitcoin, the world’s biggest and best-known cryptocurrency, has climbed more than 15-fold since the start of the year. The value of all cryptocurrencies, including bitcoin, now stands at about $415 billion, according to Coinmarketcap. That’s a small fraction of total amount of money in the world estimated at around $84 trillion, according to Business Insider.

But some of the freewheeling cryptocurrency exchanges are plagued by poor security and lack investor protections common in more regulated financial markets.

There have been at least three dozen heists of cryptocurrency exchanges since 2011; many of the hacked exchanges later shut down, most notably Mt. Gox, which was the world’s largest bitcoin trading exchange when it went under in 2014.

FILE PHOTO: A copy of bitcoin standing on PC motherboard is seen in this illustration picture, October 26, 2017. REUTERS/Dado Ruvic/File Photo

More than 980,000 bitcoins have been stolen, which today would be worth about $4 billion, Reuters found. Few have been recovered and burned investors have been left at the mercy of exchanges as to whether they will receive any compensation.

NiceHash, which halted operations on Wednesday after discovering the hack, has provided few details about the incident. It was not clear whether the company or its customers would end up losing the stolen bitcoin if they are not recovered.

Slovenian police are investigating the incident.

“Investigation is very intensive at the moment but we cannot talk about it in detail,” Deputy Director of the Criminal Police Department Bostjan Lindav told reporters. 

Škraba told Reuters NiceHash was cooperating with local authorities, but declined to provide further information.

NiceHash, which matches people looking to sell processing time on their computers in exchange for the digital currency bitcoin, advised users to change online passwords in a statement published on Wednesday on its website.

“We understand that you will have a lot of questions, and we ask for patience and understanding while we investigate the causes and find the appropriate solutions for the future of the service,” it said in the statement.

Reporting by Jim Finkle in Toronto and Jeremy Wagstaff in Singapore; Additional reporting by Marja Novak in Ljubljana and Bhanu Pratap in Bengaluru; Editing by Raju Gopalakrishnan

Our Standards:The Thomson Reuters Trust Principles.
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