Hacked bitcoin exchange site maintained no database backups

Bitcoinica’s hiatus from the online currency exchange game could take longer than even the underground site’s most vocal critics originally thought.

Following a mid-May hack to its system that resulted in the disappearance of 18,547 bitcoins (approximately $90,000 US), the site—once recognized as a leader in a rapidly growing online currency industry—announced that it would suspend operations indefinitely, saying that it would pick up again once the site found a way to properly recompense those who were victims of the heist.

But a Bitcoinica developer explained in a bitcointalk.org forum post Friday that Bitcoinica had been guilty of not keeping proper database backups. The site has no idea which of its users has lost what.

Bitcoinica’s issues are no longer rooted in site security and backend maintenance. Rather, the site’s handlers are currently in possession of a virtual mountain of bitcoins with no idea how to dole that currency out.

The developer, who posts on bitcointalk.org as genjix, wrote that Bitcoin’s team has just been able to draw upon “only partial records for accounting… used to extrapolate balances” and that sorting through the myriad of balances affected by the heist would be like piecing together “a big jigsaw puzzle.”

“They need a full view of the claims before payouts begin to properly cross match records,” genjix wrote.

The admission was met with a sour response by the Bitcoinica community, which has spent the past three weeks looking for answers. A number of its members now believe that the site’s founder, Zhou Tong, is ill equipped to operate such a large exchange system. Others are tired of seeing Bitcoinica air its dirty laundry and just want to see the site restored—as well as their balances.

Bitcoinica’s troubles come at a time when the bitcoin industry is thriving in ways like never before. BitInstant, a similar bitcoin exchange site, was announced as the first bitcoin site to be federally licensed in April, and the exchange rate between bitcoin and tangible currency has leveled to the point where merchants can now account for use of the currency. In a recent email, Coinbus CEO Julian Tosh said that over 700,000 offline merchants in the United States, Russia, Brazil, and Canada are now catering to bitcoin deposits and exchanges.

Photo via Sylvar

Chase Hoffberger

Chase Hoffberger

Chase Hoffberger reported on YouTube, web culture, and crime for the Daily Dot until 2013, when he joined the Austin Chronicle. Until late 2018, he served as that paper’s news editor and reported on criminal justice and politics.