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Cryptsy claims it had their Bitcoin stolen

By Sharon Rowe
In Cryptocoins
Jan 15th, 2016

Cryptsy has been the subject of many articles and much speculation the past few months. There have been a lot of problems with withdrawals and Cryptsy has finally thrown the towel in the ring. The exchange posted a blog today stating that it had their Bitcoin stolen back in July 29 in 2014. This is thé event where it all went wrong, says Cryptsy. The exchange claims it had 13.000 BTC stolen along with 300.000 LTC.

Cryptsy says that the developer of Lucky7Coin is behind the major theft and that the developer used an IRC backdoor to gain access. Cryptsy also added that it was making more money than it was spending money at that time, so it was the perfect time to commit the theft.

Cryptsy also blamed the article posted by Coinfire, that stated that the exchange was under federal investigation. Paul Vern wrote in a direct response to that article that the article was untrue and that there was no investigation happening. Cryptsy was also looking into taking legal steps to having the article brought down.

Under fire by Coinfire

The article in question was also mentioned in Cryptsy’s latest blog, to confirm that it is indeed insolvent, the exchange states: Not until the article published by Coinfire, which contained a lot of false accusations, things began to fall apart. The article caused users of the exchange to take all of their coins from the exchange, which depleted the entire reserve and caused problems.

The Bitcoin exchange also mentioned that its liabilities towards customers are an astounding 10.000 BTC, which is about 4 million dollars, which may cause the exchange to shut down the website and file for bankruptcy.

Cryptsy first stated that it was the victim of a theft, but what is weird is the fact that it hadn’t informed the authorities as it feared a panic among its users. Cryptsy did reveal that it was in contact with agent Shaun Bridges from the Secret Service, but that wasn’t related to the theft.

Another attack on Cryptsy

Late 2014 the exchange mentioned that it was being the victim of a DDoS attack, which caused the exchange to deal with several problems. One of them being fraudulent claims from their users.

For now the withdrawals have been stalled but if the exchange is able to, somehow, re-aquire, its stolen funds it will process all the withdrawal requests again. But chances are, that Cryptsy will go offline and will never see the light of day ever again.

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