Bitcoins wiped out from Silk Road

Earlier I've wrote about the Bitcoin downfall that's going on, but today has to be one of the most challenging days for the market that's already in shambles. When police authorities arrested Steve Sadler, Silk Road admin, everyone believed that it's not long before a 2.0 version of Silk Road will appear. Silk Road 2.0 appeared in a matter of days giving the opportunity for buyers and sellers of drugs to bounce back. The bitcoin glitch that I wrote about last week, seem to have hit Silk Road really heavy. The new administrator of this online drug market came out to say that their accounts have been stolen and Silk Road lost as much as $2.7 millions worth of customers bitcoins.

It is believed that Silk Road stored 4,440 bitcoins and the reported news of this sum being stolen has effected the market price. Once the news spread, the price for a bitcoin fell greatly, but it managed to recover overnight with $633 at the moment. Silk Road can only be accessed through Tor, a program designed to hide the location of the user.

Administrator of Silk Road released three names responsible for the hacking

The former administrator, Steve Sadler, was arrested in October, last year and accused of different serious charges including money laundering, drug selling and other crimes. Since then, the website has been laying low and only the more serious users performing purchases. Because bitcoins can not be traced back to the individual it is the only acceptable currency on the website. This type of cryptocurrency is not insured and regulated by the goverment which makes it so appealing to cyber criminals. Money that is now stolen from the accounts of Silk Road users are sure to be lost forever.

The new administrator of Silk Road, Defcon, posted a message saying that the hackers took advantage of the same recent Mt. Gox and Bitstamp security glitches that forced the exchange markets to go offline for two weeks now. The security glitch faked the withdrawal process and allowed the hackers to perform it over and over again till the accounts were empty. The administrator went as far as releasing the names of three different individuals that are thought to be responsible for the hacking. He then urged the users to "stop at nothing to bring this person to your own definition of justice.", suggesting that any punishment is acceptable. 

"I failed you as a leader and am completely devastated by today's discoveries," continued Defcon saying that it's partly his mistake by not shutting the operations as other major exchange markets did. The glitch could have been avoided if there was necessary measures taken. Other users discussed the possibility of Defcon faking the hacking and trying to steal the money himself. However, in the world of cryptocurrency, you can not prove it.

These are exactly the type of news that keeps bitcoins away from the mainstream. More and more controversial stories revealing does not give any credit to bitcoins and it's a question of debates if this type of currency will ever go public.