Cryptsy Finally Reveals Source of Withdrawal Issues - $6 Million Hacking

Following months of withdrawal complaints, nasty rumors and wild speculations, troubled Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term exchange, Cryptsy, has finally produced an explanation for its situation. Its founder Paul Vernon (Big Vern) laid out the case that Cryptsy suffered from a cyber attack leaving it with a loss worth millions of dollars.

According to the new claims, an alleged hacker claiming to be the developer of Lucky7Coin, had inserted a type of Trojan horse malware (an IRC backdoor) into the code of the wallet thus allowing him to collect information from the inside of Cryptsy. This enabled the cyber attacker to transfer Bitcoin Bitcoin While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that Read this Term and litecoin, as well as a couple of other smaller cryptocurrencies, out of Cryptsy's "safe/cold" wallet. The amounts taken were about 13,000 BTC and 300,000 LTC, worth almost $6 million in current rates.

This was made known to Cryptsy about a year and a half ago, we are now told, which raises questions such as why were clients not warned immediately and why were they allowed to continue depositing their funds into the exchange. Big Vern says he tried turning to American authorities such as the FBI but has not received any help from them. In the meanwhile "the website was earning more than it was spending" and therefore Cryptsy tried to cover up the problem. "The decision was made to pull from our profits to fill these wallets back up over time, thus attempting to avert complete closure of the website at that time."

Dead or alive?

Cryptsy now reportedly owes around 10,000 BTC to its clients and Big Vern thought there are just three possible resolutions to the situation; he could shut down the exchange and file for bankruptcy - leaving debtors to wait for a court to make disbursements; a new buyer could acquire Cryptsy and pay the withdrawals from his funds; the loss might be somehow recovered - for this reason he issued a bounty of 1000 BTC for information leading to the recovery of the stolen coins, but offered the hacker a way to return his loot.

"If they are returned, then we will assume that no harm was meant and will not take any action to reveal who you are. If not, well, then I suppose the entire community will be looking for you."

Following this announcement Cryptsy reportedly received offers of help in its search as well as more suggestions for resolving the issue. Among those are spreading the loss to all users in the system, restricting withdrawals on short balanced coins, and placing existing balances into a frozen state and releasing funds as they become available from fees collected. Big Vern is also looking for bitcoin community leaders to participate in an advisory board for keeping Cryptsy operational.

The dramatic Cryptsy announcment did not provide any details on how it will respond to a class action lawsuit filed last week in a U.S federal court against the Florida-based exchange and its head.