July 2011 – Bitomat Hack

Poland-based third largest Bitcoin exchange, announced that as of July 26 they lost access to their wallet.dat file and thus the exchange’s entire fund base has become inaccessible. The Bitomat then put its service up for sale for 17,000 Bitcoins to help recover the cost of the missing coins and return them to their owners.

According to the statement published by Bitomat, it appears that they were using Amazon Web Service’s Elastic Cloud Computing network and held all of their information, including the wallet file for the exchanges bitcoins in a virtual machine. Here’s a portion of an unofficial translation of the statement,

On 26 July 2011 at about 11:00 PM, I noticed that bitcoin server was out of resources and I had to increase RAM. As a result of this operation, the virtual machine was deleted and all data lost, including bitcoin wallet and its backups.

I have established that data was lost because settings of the virtual machine were changed, although I didn’t change them myself. Amazon Web Services Company, which hosts our servers, says that the cleared machine has been set up to be irretrievably destroyed (including the data on the disks) at the shutdown.

I’m still trying to establish who has changed the settings and whether I will be able to recover the lost data. Unfortunately cooperation with Amazon Web Services is very difficult. As soon as I realized that my virtual machine was lost I have ordered AWS premium support, talked to the manager and asked for securing of the disk data. So far, without success.

From the translation above it’s apparent that they were using Amazon Web Services Elastic Cloud Computing to host virtual machines and that the instances that ran their exchange had been reset.

AWS contain numerous warnings to users that the virtual machines running in the EC2 cloud make use of ephemeral instances; meaning that if an instance is taken offline all the data stored within can be lost permanently. Taken from the statement, it appears that Bitomat happened to be storing backups and current state of their wallet in an EC2 virtual machine so it’s possible that they have little change of recovering the old funds from the wallet.

After the hack, the following message was posted on www.bitomat.pl, home of the polish exchange:

Mt.Gox, The World’s Largest Bitcoin Exchange to Acquire Bitomat.pl, Compensate Loss Of Bitcoins

The last week has shaken the confidence of the bitcoin community as a whole. Thanks to news of MyBitcoin.com collapsing with an as yet undisclosed amount of bitcoins (now in receivership), and a critical technical problem that resulted in the loss of 17,000 BTC from Bitomat.pl (bitcoin’s 3rd largest exchange), the price of bitcoin has dropped into single digits for the first time since May.

Mt.Gox (Tibanne Co. Ltd.) believes that bitcoin and the community will grow and mature past these extremely unfortunate events, just as Mt.Gox endured the June hack event and has continued to prosper. Mt.Gox believes that the bitcoin market will recover from the recent price drop as trust is restored by the alliance of bitcoin related businesses.

Mt.Gox is convinced of this so much, that we’re going to put our bitcoin where our mouth is.

For Immediate Release.

TOKYO, Japan, August 11, 2011

In an effort to restore confidence in the bitcoin economy, Mt.Gox (Tibanne Co. Ltd.) has agreed to incorporate the Bitomat.pl user database into the Mt.Gox trading engine. As part of this process, Mt.Gox with the help of its partners will restore the lost balances of Bitomat.pl user accounts. Additionally, Mt.Gox will open its first additional currency market with the Polish Zloty, enabling Polish customers to deposit and withdraw funds easily with Mt.Gox and trade in the world’s largest bitcoin market.

On August 11, 2011 trading on Bitomat.pl will cease and the website will be shutdown while the migration occurs. Once the migration completes, the Bitomat.pl domain will forward to a Polish language version of MtGox.com and Bitomat.pl users will effectively become Mt.Gox users. Newly migrated Mt.Gox users will be able access their accounts with their Bitomat.pl username and password and begin trading immediately with their imported/restored balances. The main method for depositing the Polish Zloty into Mt.Gox will be via polish bank transfers with SEPA transfers to follow in the near future.

The integration of Bitomat.pl, the world’s 3rd largest bitcoin exchange, into Mt.Gox will further drive the overall bitcoin economy by further strengthening the world’s leading bitcoin marketplace.

“The acquisition of Bitomat.pl is a windfall for its users, especially in the wake of such a sudden and unsettling event. Also, for the first time ever on a bitcoin exchange users are now able to access a substantially larger market with their local currency, so we think it’s a happy ending all around”, said Mark Karpeles of Tibanne Co. Ltd.

About MtGox.com

MtGox.com is the world’s leading bitcoin exchange, featuring instantaneous electronic trading of bitcoins for MTGUSD. MtGox.com officially launched July 18, 2010 and was acquired by Tibanne Co., Ltd. on March 6, 2011.

Adam Turner – Adam@Tibanne.com

The exchange went online on April 4, 2011.

The exchange went offline on July 26th, 2011 and on July 31, 2011 the site returned but carried the message that a system failure occurred: “all data stored has been lost!, Including records concerning bitcoin portfolio and its backups (backups)”. Additionally, the message contained the solicitation: “Www.bitomat.pl service is on sale”. A few days later the site reopened and trading resumed.

The service was acquired by Mt. Gox on August 11, 2011.


Statement on Bitomat.pl
Statement on MtGox.com

Februrary 2014 – MtGox Hack


June 2011 – MyBitcoins Hack