Chinese Bitcoin exchange BTER.com claimed Sunday that its exchange had been targeted by a major hack that had seen it lose 7170 Bitcoins, currently valued at $1.66 million.

The exchange ceased trading and suspended all Bitcoin wallets, saying in a statement on its site that:

7170 BTC got stolen from our cold wallet in this transaction:

https://blockchain.info/tx/f5b0363f03e1ed8bb812c135
361ea93590c831ce9f13a3750be1b93575baccc6

720 BTC bounty for chasing it back.

All wallets have been shut down and withdrawals of the unaffected coins will be arranged later.

BTER.com
Email:support@mail.bter.com
Phone:400-0070-955
QQ: 4000070955

The reward offered for the return of the Bitcoin’s equals $166,000 at the time of writing.

The price of Bitcoin surged to $270 early on Sunday morning just prior to the alleged hack taking place, causing some to speculate that the hackers may have intentionally manipulated the market just prior to the heist and subsequent sell off of the Bitcoins.

Inside job?

Users on Reddit claim the hack was nothing more than an insider job, with user SmoothSloth writing that “it is nearly impossible for a hack of this size to occur given the advent of Multi Signature and Multi Factor Authentication.”

“Like most hacks that have occurred since Mt. Gox, it is a result of criminal negligence. If you are not comfortable handling your own op sec at this time be sure to use an exchange that is no farther than a domestic plane ride away from your location,” he continued.

Other users noted rightfully that BTER.com claims that the hack occurred from a cold wallet, which is highly inconceivable in itself. In Bitcoin terms, a cold wallet is an account in which funds can’t be transferred externally: think about if you have a dedicated high interest account with your bank where you can place funds but to access them you transfer them to your normal day to day bank account; a cold wallet is similar and is used as an extra security measure by Bitcoin users to quarantine their Bitcoin’s in the case their hot wallets (main transaction accounts if you like) are actually hacked.

The technical issues aside, it could quite conceivably be yet another insider job, given since the days of Mt. Gox they’ve just kept on coming.

We’ll update the post if we hear more.

photo credit: bitcoins piles via photopin (license)