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DNS Hijack Leads To Bitcoin Heist 126

Posted by timothy
from the don't-make-trouble-nobody-gets-hoit dept.
First time accepted submitter FearTheFez writes "Social Engineering and poor DNS Security lead to a Bitcoin heist worth about $12000. Bitcoin broker Bitinstant was robbed after thieves managed to take over ownership of their domains. While Bitinstant claims that no customers lost any money, without 2 factor authentication all it took was a place of birth and a mothers maiden name to gain access. This looks like poor security from everyone involved."
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DNS Hijack Leads To Bitcoin Heist

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  • by Anonymous Coward on Saturday March 09, 2013 @02:56AM (#43124297)

    Bitinstant's mother. She knows both her maiden name and his birthdate, probably.

  • Non story (Score:4, Insightful)

    by Zemran (3101) on Saturday March 09, 2013 @03:08AM (#43124339) Homepage Journal

    If a standard currency exchange was robbed for $12,000 we would not even read the story. This is a trivial crime and of little interest. It serves more as a warning rather than as a bank robbery story. I hope that those that are concerned learn from this but if this is the crime of the century in the Bitcoin world then they are doing really well.

    • by Anonymous Coward

      On the other hand, if standard banking websites were created by rube PHP coderz and buttards who can't secure their domain, it would be major news.

      Bitcoin is stil mostly underground, and therefore the community is full of incompetents, phonies, and scammers. Goes with the territory.

      captcha: superego

      • Re:Non story (Score:4, Insightful)

        by ArsenneLupin (766289) on Saturday March 09, 2013 @04:12AM (#43124491)
        Part of the hack was to exploit the unsecure procedures at the DNS registrar to add a new e-mail address for administering the victim's domain.

        Any other company at the same registrar could fall victim for this, even a bank! And actually many registrars are this unsecure: not so long ago, it was possible to do similar things with just a faxed request with a (faked) signature. Not even necessary to know birth town and mother maiden name.

        So, blaming this on lack of PHP (or other) coding skills of the victim is silly. Blame the insecure DNS registrar.

        What would protect a brick and mortar bank against a similar hack would not be its coding skills, but rather its notoriety: a DNS registrar would hesitate if suddenly somebody asked to add a hotmail e-mail address to a well-known bank's registry information, and would try to confirm this by phoning back the bank during business hours before doing such change.

        • Re: (Score:3, Interesting)

          The DNS registrar actually spoke about this incident publicly - it turns out that there was no social engineering, BitInstant just selected dumb security questions/answers when they registered the domain name. It's poor security on BitInstants part, no more or less.

          • BitInstant just selected dumb security questions/answers when they registered the domain name.

            Wait, were the questions dumb, or the answers?

            Allowing your clients to select dumb, insecure questions means that you have an optionally secure registration platform, which requires your customers to be competent about security.

            To me, this kind of incedent points out the need for a more expensive, higher security registrar, who designs systems which are very hard to subvert. Till now, DNS regstrars have competed on price. This story says that security is important too, especially when control of the domain

        • by rvw (755107)

          Part of the hack was to exploit the unsecure procedures at the DNS registrar to add a new e-mail address for administering the victim's domain.

          Any other company at the same registrar could fall victim for this, even a bank! And actually many registrars are this unsecure: not so long ago, it was possible to do similar things with just a faxed request with a (faked) signature. Not even necessary to know birth town and mother maiden name.

          We had this at our company last year. Someone hacked into our account at the DNS provider, changed the DNS for the mail of one domain, then used that to request a new password for our Amazon EC2 account, which had two-factor login. They called Amazon, which disabled the two-factor login, after which they could take over the Amazon account. It took us two days to gain full control back over the account, as Amazon was unable to log the out. The DNS provider didn't give any good explanation about how this was

    • Re:Non story (Score:5, Interesting)

      by mkraft (200694) on Saturday March 09, 2013 @03:22AM (#43124381)

      If a standard currency exchange was robbed for $12,000 we would not even read the story. This is a trivial crime and of little interest. It serves more as a warning rather than as a bank robbery story. I hope that those that are concerned learn from this but if this is the crime of the century in the Bitcoin world then they are doing really well.

      No, the Bitcoin crime of the century was last year when the same server was hacked twice, to a tune of several hundred thousand dollars, as mentioned in TFA. Bitcoin hacks are becoming more and more common, so it's only a matter of time before that amount is surpassed.

      Personally I don't see the point of bitcoins. I don't pay for everything in cash in the real world because it lacks the protections that other payment methods have. I don't see a reason to use a digital equivalent of cash in the online world. Bitcoins' anonymity might be it's biggest strength, but it's also it's biggest weakness.

      • Re: (Score:3, Insightful)

        by Pentium100 (1240090)

        I pay for everything in cash or debit card, but the card is only for convenience - my salary is wired to the bank account, so to have cash I have to go to an ATM and take it. Also, since I also buy stuff online, I have to have money in my bank account (since I can't pay an online store in cash).

        Bitcoin has some problems though. When I pay in cash, I am physically in the store, I can inspect the item etc and if the store does something wrong, I know where it is and can complain to the authorities. Online pur

        • Re:Non story (Score:5, Informative)

          by philip.paradis (2580427) on Saturday March 09, 2013 @05:06AM (#43124611)

          There's nothing stopping you from conducting a Bitcoin transaction in person, aside from the other party needing to hold and/or be able to receive BTC as well. For the holding part, new solutions providers such as Coinbase [coinbase.com] are starting to focus on merchant gateway style solutions. Progress is being made.

          • Re:Non story (Score:5, Insightful)

            by Pentium100 (1240090) on Saturday March 09, 2013 @05:30AM (#43124665)

            There's nothing stopping you from conducting a Bitcoin transaction in person, aside from the other party needing to hold and/or be able to receive BTC as well.

            Yes, but if the transaction is in person, I might as well use cash. Neither me nor him would need an internet connected device to send/receive money and no need to wait for confirmations.

            One day Bitcoin may be really convenient, but right now it is too much like cash for online use and too much like a wire transfer (or paypal) for in person use.

            • Re:Non story (Score:4, Informative)

              by philip.paradis (2580427) on Saturday March 09, 2013 @06:18AM (#43124769)

              I think you're missing some of the benefits of BTC-based transactions. First, they're rather difficult to forge by virtue of reliance upon math for integrity verification. The same can't be said of cash, and the average man on the street would be hard pressed to discern half decent counterfeit paper currency from the real deal. While this particular example may represent a corner case for some, I happen to know two people who have been defrauded with counterfeit currency.

              Second, Internet connected devices are everywhere. It's getting rather hard to find people without basic web access via a smart-ish phone in many areas, and full fledged BTC apps are popping up for those with anything fairly modern in terms of radio handsets. I wouldn't be terribly shocked to find devices that cater to simple apps and BTC transactions popping up in developing areas in the near future either.

              With respect to waiting for confirmation, most transactions are verified on the BTC network within one hour. If you're willing to pay a small transaction fee to the network, verification can come more quickly. As a side effect of this state of affairs, you might just gain the benefit of meeting up with your transactional counterpart at a coffee house and having a tasty beverage. I call that an excuse to take a break, and welcome it.

              • Re:Non story (Score:5, Insightful)

                by athmanb (100367) on Saturday March 09, 2013 @08:22AM (#43125039)

                One hour? If "ease of use" means to have to wait a full hour for confirmation whether the purchase of your coffee went through or not I think I'd rather use cash...

                • Depending of course upon the physical stage for the transaction, the verification period may indeed be a rote formality, more importantly if you've dealt with the other party to the transaction before and most importantly if you plan on dealing with that party again (which represents the very foundation of "credit" ala reputation in economic systems). Again, it's also easy to drastically accelerate the verification time by paying a small transaction fee to the network for processing it. I'd also encourage y
                  • by Anonymous Coward

                    So you'd have to have a gift card ahead of time to the place you want to go... that sounds practical for every day use.

                    So I'm on a trip, vacation, whatever. I get a flat tire and need to buy a replacement. I either hopefully purchased a gift card to what happens to be the closest tire shop, or I get to sit an EXTRA HOUR waiting for the transaction to process.

                    Same with gas, or any other impulse buy or anything needed in a hurry.

                    It's just not practical at all.

                • by brokenin2 (103006) *

                  Bitcoin's version of confirmation means that the transaction is set in stone. It's virtually impossible to conceive of a way that the transaction could ever be undone under any circumstances.

                  When you use your debit card at the store, this is not what you're doing or getting.

                  If you just want to know that someone had funds available, and has sent them to you, then you will find that out in a couple of seconds.. It's still theoretically possible (but pretty darn difficult) they they could also spend those fund

            • by crtreece (59298)

              need an internet connected device to send/receive money

              Not exactly cash, but you can make transactions via SMS [localbitcoins.com].

        • The Bitcoin protocol has support for dispute mediation in it (actually, 2-of-3 signing for coins). Unfortunately the surrounding ecosystem does not exist ... the features aren't exposed via GUIs and there are no dispute mediators who support it. But probably it will come in future. Right now there doesn't seem to be much demand, many sellers have been able to build a trustworthy reputation.

      • by Sam H (3979)

        Oh, so you don’t believe the Bitcoin crime of the century was pirateat40’s BS&T going away with 500,000 BTC, that are now valued at about 20 million dollars?

      • Personally I don't see the point of bitcoins

        It's a very volatile market that has no regulation. Or, to put it another way, it's a completely unregulated online casino. If you can't see the market for this, you haven't been paying attention for the last few years...

      • If you are talking about credit cards, that is completely different. You still have to pay of your credit card somehow.

        If you are talking about something linked to a bank account (e.g. like a debit card), then it is similar to paying with bitcoin.

        The difference is not in how you pay but how the money is stored. If your money is stored in a US bank account, it can be taken easily be seized by anyone with enough authority. The US government freezes people's bank accounts regularly. If you bury US dollars

      • Personally I don't see the point of bitcoins. I don't pay for everything in cash in the real world because it lacks the protections that other payment methods have.

        But the problems are symmetrical. If you're an American, you're using a different digital currency (USD) that lacks the cryptographic and non-inflationary benefits of Bitcoin. But, over time many groups of people have created systems to allow you to use that currency in a more safe manner than storing large anonymous bits of it yourself. For

      • > Personally I don't see the point of bitcoins.

        That's because you are not a merchant. Credit card fraud is 3% of all credit card transactions, and usually it is the merchant who loses. Credit card processing for legitimate transactions is another couple of percent in fees. A low fee solution with no possibility of charge backs is very attractive relative to this.

    • Please bear in mind that one of the more interesting aspects of this story is the fact that there is no standard set of currency exchanges for BTC. In fact, it's rather trivial to set one up. For well recognized exchanges, there are various actors in the market, each with varying codebases driving their infrastructure.

      This is a fairly direct example of one of the strengths of Bitcoin as a currency, and speaks volumes to the advantages that can be gained by network users who utilize as many distributed excha

  • I've heard a few people with bitcoins complaining about how they can't do anything with them and they're locked in. Apparently there's an online store that catalogs all the stuff you can buy all over the place, with bitcoins . . . and it looked to me like the kind of shitty collection of stuff you'd expect at a flea market. High priced low-end windows laptops and speaker wire and shampoo and shit.

    • You are not locked in because one of the things you can buy with bitcoins are dollars. And those dollars can then be used to buy about anything that can be bought at all.

    • You can shop for anything online using http://bitspend.net/ [bitspend.net]

      Amazon, newegg, ebay, department stores, etc.

      You can get a US Dollar-denominated Mastercard debit card from http://www.okpay.com/en/services/accept-payments/index.html [okpay.com]

      and fund it with bitcoins.

  • what, only 300 BTC ? (Score:4, Interesting)

    by Janek Kozicki (722688) on Saturday March 09, 2013 @04:53AM (#43124595) Journal
    You talk here about theft worth only 300 BTCs or 12 000$

    Well, I can only conclude that overall BTC security maybe has improved. Recall previous thefts worth of 25 000 BTC or 500 000$ [bitcointalk.org] (at that time) or 18 547 BTC or 87 000$ [slashdot.org] (at that time).

    Why such conclusion? Well, if those evil people started to go after such low-profile target, it *can* mean that all high profile targets have adequate security.
    • by wvmarle (1070040)

      And it being a digital currency, any way to disable the stolen coins to make them worthless? Would be interesting, especially in light of the limited number of bitcoin that can exist.

      • The coins themselves aren't identifiable; you could refuse to process the transactions coming from the thieve's addresses, but:

        1.) Since the system is decentralized, you'd need to get all miners to agree to it (not likely).

        2.) The thieves often send some of the coins to other people's addresses, to make it harder to identify them.

      • bitcoin is in much more aspects like gold, than you would initially expect.

        How would you "disable" stolen gold bars? Theoretically there are ways to mark gold using rare gold isotopes, so that even smelting will not destroy the signature. But this is not practical - it would require isotope detector at every place that trades even smallest amounts of gold.

        With bitcoin it is similar. In fact all bitcoins are already marked separately, and can be precisely tracked, but tracking only stolen ones (even if w
      • The problem is that can transactions can happen faster than the information that fraud occurred. If the coins are marked hot after the thieves already traded them, then the merchants they traded with are out of luck. This would cause merchants in general to be wary of accepting bitcoins, and bring up all the same problems we have with credit cards and other financial instruments today.

  • by MrL0G1C (867445) on Saturday March 09, 2013 @08:42AM (#43125103) Journal

    Mothers maiden name: 9zimu8sj4q99uf
    Place of birth: wj9awitkj4girc

    If you use real details, you're a fool.

  • what actually happens in this type of incident? from what i read, the bitcoin is supposed to be tied to your secret keys and whatnot. so what do they actually steal from the "broker"?

  • by PopeRatzo (965947) on Saturday March 09, 2013 @09:39AM (#43125245) Homepage Journal

    One of the thieves was later seen at the racetrack, trying to put down 1024 bitcoins on a horse in the third race.

    He was apprehended and later sentenced to 10 years of ridicule without possibility of parole.

  • This looks like poor security from everyone involved.

    This is perhaps arguable in the case of VirWox, the exchange used to move the money out of the account. According to the article, VirWox has offered two factor authentication since September of last year. The fact that BitInstant didn't use it allowed the attackers to succeed with the heist. I say arguable because two factor authentication should probably be mandatory for anything that involves monetary transactions.

    • Two factor authentication is useless in its current state. The whole question/answer is pointless and only used by banks and other sites to meet buzz word "two factor authentication". The only protection this offers is against a site wide attack against a large set of user accounts at once. But it is absolutely no trouble at all to gather the simple information needed to answer all the typical questions asked in two factor authentication.

      In response, some users will put in false answers to the questions ask

      • I just wanted to add that this test solution I made only works under firefox. Both Chrome and IE fail because they do not provide a safe mechanism for storing login credentials. They also do not provide a strong encrypted and private way of transferring login credentials between various PCs and other devices. Only firefox is strong enough to store your login credentials without potential comprimise. Chrome and IE (and Safari, etc) are weak browsers that should not be used for things like login into banks, f

  • Believe it or not that was only approximately 266 bitcoins.
    • 266 bitcoins? Wow, that would cost at least 12,000 dollars to replace them.

      It really doesnt matter how many bitcoins it is or is not. The important aspect is how much value they retain. At the moment it would take a fair amount of money to replace it. Thats like saying: believe it or not, thats only 8 oz of gold. But the quantity means nothing until you try to sell or buy it. So in fact its the dollar value and not the quantity of goods that is significant.

      But I do hear what you are saying... bitcoins are o

      • My point of posting that was to show how much bitcoins are worth. Of course the "important aspect" is how much value they retain, how do you think I came up with 266 BTC?! And of course BTC value is on the rise, with bitcoins being harder to mine everyday, with that 21,000,000 bitcoins upward limit. If it were " 26.6 trillion deca-nano" bitcoins stolen, I'd say that right?! But no, I said 266 with the presumed decimal point after the second "6", that everyone else seemed to understand. I also said "approxim
  • Amateur bankers hustled by trivial attack. Film at eleven.

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