Bitcoinica Sued for $460,457.70 over Lost Bitcoins Due to Lax Security
By on August 13th, 2012

Bitcoin grew to be extremely popular over the last year, though the value of a Bitcoin fell from a whopping $15 to $3. Although it seems to have stabilized at $9 after a recent rise, the Bitcoin ecosystem is not free of troubles yet. Recently, the flagship Bitcoin trading platform, Bitcoinica has attracted a lot of hackers, and there have been two major security breaches at Bitcoinica.

Bitcoin

Bitcoinica started as a one-man show by Zhou Tong, and soon thereafter, he put together a team to manage this prospective business. However, the Bitcoinica platform has been upset by hack attempts, and the response from the people at Bitcoinica is not very promising either. In a disturbing statement made in May, Bitcoinica admits to have ignored user security, saying,

The recent security breach was not beyond our team’s skills to prevent. We know better. But we did not address relevant issues as quickly as was needed.

Now, the users of the Bitcoinica platform are suing Bitcoinica for $460,457.70 over lost Bitcoins. This includes the price of lost Bitcoins and other damages. Bitcoinica lost Bitcoins worth $87,000 in the first hack (43,554 Bitcoins), and $90,000 (18,547 Bitcoins) in the second hack.

The charge does not come out of the blue, as Bitcoinica promised to cover the losses of its users on two instances, once by promising to pay the entire Bitcoins lost due to hacking, and another time by promising to pay 50% of the lost Bitcoins. However, it has failed to live up to its promises on both instances, and the discontent towards Bitcoinica does not end here. The plaintiffs have also accused Bitcoinica of following corrupt processes.

For a currency system that emerged with a global outlook and a dream of government-intervention-free trading, the Bitcoin ecosystem just fell flat on its face with hack attacks and this recent court case.

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Author: Chinmoy Kanjilal Google Profile for Chinmoy Kanjilal
Chinmoy Kanjilal is a FOSS enthusiast and evangelist. He is passionate about Android. Security exploits turn him on and he loves to tinker with computer networks. He rants occasionally at Techarraz.com. You can connect with him on Twitter @ckandroid.

Chinmoy Kanjilal has written and can be contacted at chinmoy@techie-buzz.com.
 
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