Feeds

Silk Road reboot claims: Hacker STOLE all our Bitcoin funds

In shocking turn, drug world proves unworthy of trust

Security for virtualized datacentres

The latest incarnation of the Silk Road underground market says it lost all of its Bitcoin reserves (estimated to be worth two to three million dollars) in a fraud attack.

A site administrator said on Wednesday that a group of hackers appear to have exploited the Bitcoin "transaction malleability" loophole to withdraw funds from the site just as admins were conducting maintenance work that required funds to be placed in a vulnerable location.

The result, according to administrator "Defcon" was the complete loss of all Bitcoin funds the site had in its escrow holdings.

"This attack hit us at the worst possible time. We were planning on re-launching the new auto-finalize and Dispute Center this past weekend, and our projections of order finalization volume indicated that we would need the community's full balance in hot storage," Defcon said in announcing the attack.

The administrators believe that the attackers were able to exploit a transaction malleability flaw similar to those spotted in the MtGox exchange. Such errors allow attackers to manipulate hash information and spoof transactions before they are processed by the vendor. In the case of Silk Road redux, the administrators say that the attackers performed such operations many times over until all funds it controlled were drained.

Despite the headlines and attention afforded to the transaction malleability flaw, the condition has been known about since 2011, and experts say that sites and exchanges using best practices could eliminate the vulnerability from their bitcoin services.

"I have failed you as a leader, and am completely devastated by today's discoveries. I should have taken MtGox and Bitstamp's lead and disabled withdrawals as soon as the malleability issue was reported," Defcon said.

"I was slow to respond and too skeptical of the possible issue at hand. It is a crushing blow."

The admin also posted a series of accounts believed to have been used by an individual or individuals involved in the attack. The majority of the funds, says Defcon, went to an individual in France, while two others in Australia are also believed to be involved. The admin has asked users to contribute any information they may have which could lead to the recovery of the funds.

The theft is the latest misfortune to strike the Silk Road family of underground market sites. Once seen as a haven for users to anonymously trade in information and goods (okay, drugs) the original Silk Road was dismantled last year and its creator, and a San Francisco man who went by the alias Dread Pirate Roberts now faces a lengthy stretch in federal prison.

Subsequent efforts to re-launch successors to Silk Road have similarly been met with police takedowns and arrests, though that has not prevented the establishment of a number of other smaller anonymous markets. ®

Secure remote control for conventional and virtual desktops

More from The Register

next story
NASTY SSL 3.0 vuln to be revealed soon – sources (Update: It's POODLE)
So nasty no one's even whispering until patch is out
Russian hackers exploit 'Sandworm' bug 'to spy on NATO, EU PCs'
Fix imminent from Microsoft for Vista, Server 2008, other stuff
'LulzSec leader Aush0k' found to be naughty boy not worthy of jail
15 months home detention leaves egg on feds' faces as they grab for more power
Forget passwords, let's use SELFIES, says Obama's cyber tsar
Michael Daniel wants to kill passwords dead
FBI boss: We don't want a backdoor, we want the front door to phones
Claims it's what the Founding Fathers would have wanted – catching killers and pedos
Kill off SSL 3.0 NOW: HTTPS savaged by vicious POODLE
Pull it out ASAP, it is SWISS CHEESE
Facebook slurps 'paste sites' for STOLEN passwords, sprinkles on hash and salt
Zuck's ad empire DOESN'T see details in plain text. Phew!
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.