LocalBitcoins Hacked, Security Breach Allowed Unauthorized Transactions

LocalBitcoins Hacked, Security Breach Allowed Unauthorized Transactions

LocalBitcoins detected a security breach that allowed “unauthorized sources” to access and send transactions from a number of affected accounts. So far, there have been six confirmed cases of the breach. The company identified the source of the problem as a “feature powered by third-party software.”

In the latest crypto hack, peer-to-peer trading service LocalBitcoins was breached on Jan. 26th at approximately 10:00 UTC, according to a statement from the company.

LocalBitcoins is a peer-to-peer trading service that facilitates bitcoin trading without the use of a structured bid/ask order book. Buyers and sellers typically complete trades via bank wire and escrow, with some trades even happening in person.

Unlike other exchange services, cryptocurrency doesn’t need to be held on the platform for buyers. However, sellers may need to use LocalBitcoin’s internal wallet system for the platform’s escrow services. Sellers pay a 1.00 percent fee for every completed trade, and the service is free for buyers.

The breach is problematic because of LocalBitcoin’s internal wallet system:

Screenshot from inside the LocalBitcoins service

It is unknown whether wallets were compromised or if bitcoin was stolen during the hack. CryptoSlate reached out to LocalBitcoins for more clarity around the breach and has yet to receive a response.

According to the company’s statement, outgoing transactions were disabled, but have since been re-enabled. Furthermore, the company also disabled the LocalBitcoin forums for “security reasons” until further notice.

As part of the public statement, the company claims:

“We have taken a number of measures to address this issue and secure the limited number of accounts that might have been at risk.”

As with many online services, LocalBitcoins recommends users enable two-factor authentication to prevent unauthorized account access in the case of a future breach.

Security in the cryptocurrency sphere has been an ongoing problem. Third-party services are prone to hacks (and some even speculate that some of these hacks are “insider jobs”). However, unlike other financial services, it is ultimately up to the user to educate and protect themselves against hacking.

Posted In: Crypto Exchanges, Hacks

The above advertisement is an referral link.

Invest with AMFEIX

Like what you see? Subscribe to CryptoSlate

Get our daily newsletter containing the top blockchain stories and crypto analysis straight to your inbox.

Sign up to stay informed
Mitchell Moos

Mitchell Moos

Contributing Analyst @ CryptoSlate

Mitchell is a software enthusiast and entrepreneur. His first startup built algorithms for optimizing cryptocurrency mining. Prior to CryptoSlate, Mitchell was a project manager at a firm that built distributed software on Hyperledger. In his spare time he loves playing chess and hiking.

View author profile

Commitment to Transparency: The author of this article is invested and/or has an interest in one or more assets discussed in this post. CryptoSlate does not endorse any project or asset that may be mentioned or linked to in this article. Please take that into consideration when evaluating the content within this article.

Disclaimer: Our writers' opinions are solely their own and do not reflect the opinion of CryptoSlate. None of the information you read on CryptoSlate should be taken as investment advice, nor does CryptoSlate endorse any project that may be mentioned or linked to in this article. Buying and trading cryptocurrencies should be considered a high-risk activity. Please do your own due diligence before taking any action related to content within this article. Finally, CryptoSlate takes no responsibility should you lose money trading cryptocurrencies.