Silk Road 2.0 Claims All Bitcoins Were Lost in Hack

A fraudulent attack took out over $2.5 million worth of Bitcoins

By on February 14th, 2014 10:27 GMT

It’s been a few months since Silk Road was shut down, and nearly just as long since a copycat of the site was re-opened. Now, Silk Road 2.0 claims that all its Bitcoin reserves were stolen in a hack.

According to the complaint made by a site administrator, they lost around two or three million dollars’ worth of Bitcoins in the fraudulent attack.

According to the admin, the Bitcoins were stolen by hackers by exploiting the transaction malleability loophole to withdraw funds.

“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,” said Defcon, the admin.

The exploit used seems similar to the issue reported by MtGox last week, the world’s largest Bitcoin exchange market. The issue led, in that case, to the suspension of any type of fund withdrawals. Given how this happened a week ago, the Bitcoin prices have dropped considerably.

“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.

Most of the funds seem to have been routed to an individual in France, while another couple of people in Australia got the rest, the Silk Road admin said.

Forbes reports that Nicholas Weaver, a researcher at the International Computer Science Institute, estimates that the total theft over at Silk Road counts about 4,400 coins, which puts the value at over $2.5 million, depending on the day.

Silk Road users are none too happy about the issue and many are calling the excuse made by Defcon as fake, especially since so many asked for something to be done about this possible vulnerability over the past week.

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