Cryptsy Halts Trading and Withdrawals
- Centralized Exchange
- Security
On January 19, 2016, Cryptsy suspended trading and withdrawals amid reports that the exchange had suffered a major security breach. The Cryptsy.com `hack` that led to the exchange's shutdown in January 2016 was publicly announced by CEO Paul Vernon (aka 'Big Vern') as a major security breach from July 2014, where an alleged hacker (blamed on the developer of altcoin Lucky7Coin) inserted an IRC backdoor/Trojan into wallet code, stealing approximately 13,000 BTC and 300,000 LTC (worth about $5-7 million then). Vernon claimed the exchange kept operating by using profits to cover losses and avoid panic, but after months of withdrawal delays, rumors, and a Coinfire article sparking a bank run, Cryptsy froze withdrawals, admitted insolvency, and effectively shut down indefinitely on January 14-15, 2016.
Incident Details
- Type
- EXCHANGE HACK
- Funds Lost
- $8M
- Status
- Total loss
Cryptsy later filed for bankruptcy and its founder was accused of stealing customer funds.