Localbitcoins Shrugs Off Security Breach

Digital currency exchange Localbitcoins suffered a security breach over the weekend, but was quick to respond by taking the site offline and reassuring clients that their bitcoins and user data are safe.

The exchange described the attack as “very dangerous” and said it targeted the site infrastructure.

The breach occurred on Sunday and allowed the intruder to briefly gain access to the server console.

Hosting weakness

The attack appears to have been carried out with some good old-fashioned social engineering. Localbitcoins explainedhttp://localbitcoins.blogspot.com/2014/05/attack-against-localbitcoins.html:

“Localbitcoins hosting received a request to restart the LocalBitcoins.com website server and give access to the server console (root) on Sat May 3 13:32:27. Localbitcoins team did not initiate this request. For now, it looks like the request was made using spoofed email addresses and other weakness in the hosting provider support system.”

The Localbitcoins team was quickly alerted and the attacker had root access for about 40 minutes. Data was not compromised, however, as it is encrypted and manual actions are required for access.

“It is very unlikely that the attacker gained access to any data; Localbitcoins is still performing full investigation on the matter,” the company said.

All bitcoins stored in the Localbitcoins hot wallet and cold wallet are safe and are hosted on a separate server.

The team apologised for the outage and said it would take about 24 hours to resolve.

Popular targets

Bitcoin exchanges are a big, juicy target for hackers. Running a successful bitcoin service is a bit like painting a huge bullseye on your business, so, like most bitcoin exchanges, Localbitcoins has been down this road before.

The exchange faced a PR crisis back in April, when one user reported a wallet breach. Following an extensive investigation, Localbitcoins concluded that the attack was carried out only after the attacker gained access to the user’s mobile device – apparently via malware – not through the exchange.

This time around Localbitcoins was indeed the target, but the company's safeguards seem to have foiled the attack.

Password screen image via Shutterstock