Inputs.io hacked – 4100 BTC stolen

4100 BTC = 1.1 mil USD at current prices. These Bitcoins were stolen from website's "hot wallet" (every shared wallet has to operate one to process current withdrawals). This hot wallet was probably too hot though, as it seems that they had most of their coins online, and only about one third offline (other services claim to store 80-90% offline). According to postings on Bitcointalk.org forums people are getting back partial refunds. One person claimed to receive 37% of his balance back [1].

UPDATE: Correction - according to [4] it seems that almost all funds were stoled in the hot wallet, and the hacker was "nice" enough to not steal it all at once, presumably to stay undetected and come back for more. I'm not sure if I buy this argument though.

Also, according to the owners the hack occurred on 26th October [2]. It may be possible that if you deposited funds after that date you will receive full refund, as they should still be on their wallets. Unless hackers took that too.

UPDATE: Also according to [4] the funds that were being deposited after 26th were being withdrawn at the same time by other users. So they're as gone as the ones from before 26th. You will be refunded in full only if you deposited very recently.

This whole situation (and a bunch of previous ones) is also why at Bitalo [3], we are developing an exchange which will not have this problem, as we use multi-signature addressees to store the coins. This means that you need two signatures to spend funds - one from us, and second one from the user. We also never transmit users password over the wire, as we use SRP protocol for authentication.

In unrelated news, China just passed 1800 CNY per BTC :). I wonder how's the security status of chinese exchanges/wallets. Unfortunately I don't know the language, so can't test that.

[1] https://bitcointalk.org/index.php?topic=248803.msg3505884#ms...

[2] https://bitcointalk.org/index.php?topic=248803.msg3505966#ms...

[3] http://bitalo.com (in private beta, drop a message to martin@bitalo.com to receive an invite)

[4] https://bitcointalk.org/index.php?topic=248803.msg3506034#ms...

What happens when bitcoins are stolen? Can they be use again without being traced?

Which begs the question, how can one determine the veracity of the security claims of website operators? Bitcoins are a convertible currency but are not regulated, insured or guaranteed by any authority. I guess even modern fiat currencies had their teething problems with theft and counterfeiting, so this is not too surprising.

It depends on what you mean by 'traced.' All bitcoin transactions are 'traced,' but you can just set up a few thousand wallets, transfer some money to all of them, send them between each other, trade some away to other people for things... it's not clear simply from the transaction log who actually took them, and who is just receiving BTC from an anonymous buyer for some sort of service.