The amount of losses incurred by bitcoin based companies so far due to hacking incidents has been enormous. The actual figure is not available as most of these incidents have gone unreported. Reports about one such incident in the last year has been divulged recently in court documents filed by a big bitcoin based payment processor in the federal court in Atlanta.
The bitcoin payment processor in question here is BitPay, according to reports, the company has lost about 5000 bitcoins valued close to $1.8 million during a hacking incident in December 2014. BitPay has filed a lawsuit against its insurance provider, Massachusetts Bay Insurance Company after they allegedly refused to pay on a policy involving fraud and hacking incidents.
The lawsuit was filed day before yesterday in the court. According to the documents submitted by BitPay in the court, the hackers were able to access the company’s bitcoin deposits after they allegedly infected Bryan Krohn’s computer. Bryan Krohn is the chief financial officer at BitPay. His computer was apparently hacked after the cybercriminals gained access to his computer after he received an email from someone who claimed to be from a bitcoin and digital currency publication.
During investigation it was revealed that the sender was unaware that his computer was compromised and his mail could have triggered the whole incident by infecting Bryan Krohn’s computer. Within a couple of days, Bryan Krohn apparently received a fake weblink set up by the hackers where he ended up entering his information.
The hackers are said to have used Bryan Krohn’s credentials obtained through the fake webpage to access BitPay’s bitcoin deposits and fraudulently transferred about 5000 bitcoins to their accounts.
Massachusetts Bay Insurance was supposed to pay $950,000 to partially compensate for BitPay’s loss, but the insurance provider has refused to do so due to the nature of hack. It is still not known whether the parties will reach a settlement or go ahead with court proceedings regarding the claims.