Canadian Bitcoin exchange CAVIRTEX (161243 Alberta Inc.) has announced it is shutting down after being hacked.

The company didn’t come out and admit to being hacked however, but instead said in a statement on its site that “on February 15, 2015 we found reason to believe that an older version of our database, including 2FA secrets and hashed passwords, may have been compromised.”

CAVIRTEX claimed that despite the security breach that they had maintained 100 percent reserves, remained solvent and would accommodate all customer withdrawal requests received prior to March 25, 2015.

The excuses for the closure continued:

Because security and the safety of customer funds are paramount to our mission and the success of Bitcoin in general, CAVIRTEX has determined to cease active operations in the Bitcoin business and to return all customer funds. We believe that the damage to the company’s reputation caused by the potential compromise will significantly harm our ability to continue to operate successfully.

The company urged customers to log into their accounts and change their passwords immediately because “as a result of the potential compromise of our database we cannot be certain of the confidentiality of account credentials.”

If it looks like a duck….

The thing that screams alarm bells in CAVIRTEX’s closing statement is the fact they refuse to actually accept that they have been hacked, while using the hacking as a reason to close their doors. A database is either compromised or not compromised, it’s not potentially or may have been compromised; more so if it hasn’t been hacked there’s no excuse to close the business.

It’s less than 12 hours since the announcement was made (at the time of writing) and already users on Reddit are claiming that they’ve not been able to withdraw their funds since the announcement, despite promises by CAVIRTEX that they would be able to.

Not surprisingly CAVIRTEX has also been linked to the high yield investment program (HYIP) community as well, with founder Joseph Toth having a history of running HYIP scams in the past. The company is also subject to a Class Action Lawsuit over its initial stock offering.

CAVIRTEX may well be legitimate in wanting to return funds to customers, but the excuse given for closure, given some of the other issues the company is facing, just doesn’t hold right. Besides, would you trust the word for a founder who previously offered 87 percent returns in HYIP ponzi schemes?

The closure of CAVIRTEX is added to the ever growing list of Bitcoin exchanges going out of business, usually for the “official” reason of being hacked, but often due to theft via insider job. Recent casualties include: BTER.com, Exco.in and HitBTC, BitMarket.pl, MyCoin, EgoPay + Virtex.com + Paymentbase and others, most famous of all being Mt. Gox in 2014.

photo credit: Bitcoin Litecoin IMG_3449 via photopin (license)