<p>It is unlikely you'ld find an exchange that hasn't lost funds due to theft.</p>

<p>Mt. Gox, before Tibanne bought it, used to accept PayPal for payment.  It was fraudulent PayPal transactions that assisted in driving the exchange rate from $0.06 per BTC (yes, that is correct) in October, 2010 <a href="http://bitcoincharts.com/charts/mtgoxUSD#rg60zczsg2010-10-01zeg2010-10-14ztgSzm1g10zm2g25" rel="nofollow">to a level twice that</a> in about two days.  PayPal closed the account and froze the funds, but the thief had withdrawn bitcoins.</p>

<p>BitcoinGateway (now defunct) was the next up and experienced some fraudulent credit card charges (though their credit card merchant account got yanked once the it was figured out what the term "digital goods" really meant.) </p>

<p>Then it was <a href="http://www.bitcoinmoney.com/post/5086167006" rel="nofollow">CoinPal's turn</a> in which they battled a hack that made it appear the charge was successful, and bitcoins were paid out.  Later, fraudulent charges were experienced but were maintained at manageable levels -- before PayPal closed their account and froze the funds, causing the service to shut down.</p>

<p>Some believe that Dwolla's actions against TradeHill (now defunct) were theft of dollars, but that was simply an accounting action where numbers for TradeHill's account with Dwolla were updated and there was not a hacking into TradeHill's systems.</p>

<p>Bitcoin7 (now defunct) claimed to have had to deal with a stolen bank funds at one time, I believe.  I don't remember the details.</p>

<p>Even recently, BitPiggy, for instance, has suspended service due to their bank feezing funds after stolen monies were sent to the exchange.</p>

CC BY-SA 3.0
2012-05-24T07:56:29.147Z
2012-05-24T07:56:29.147Z
Stephen Gornick
<p>This much less likely for a number of reasons:</p>

<ul>
<li>Banks have advanced, robust and well-tested anti-fraud infrastructure, making such thefts much more likely to be detected.</li>
<li>Legally it is much much easier to prosecute for fraud cases in fiat than BTC (I do not know any prosecution over stolen Bitcoins)</li>
<li>Fiat transactions are reversible meaning the exchange could easily get its money back</li>
<li>Bitcoins are much easier to launder, so thieves are less likely to get caught </li>
</ul>

CC BY-SA 3.0
2012-05-24T01:01:25.403Z
2012-05-24T01:01:25.403Z
Peter
<p>Sure. Payments in traditional currencies are fraudulently made and/or fraudulently reversed all the time. 
This is effectively theft of that currency from the exchange.</p>

CC BY-SA 3.0
2012-05-24T00:40:18.623Z
I was thinking more about someone hacking into some exchanges' mainframes and requesting unauthorized payouts from their accounts, rather than people doing chargebacks. Asides that, do you have any data to support your answer?
ThePiachu
CC BY-SA 3.0
2012-05-23T23:58:14.760Z
2012-05-23T23:58:14.760Z
jmn
<p>There have been <a href="https://bitcoin.stackexchange.com/a/3719/323">a number of cases of thefts or losses of Bitcoins from a few Bitocoin exchanges</a>, but has there ever been a case of traditional currency being stolen or lost by an exchange?</p>

<exchanges><history><theft><loss><money>
Have there been cases of traditional money theft from Bitcoin exchanges?
ThePiachu
# Have there been cases of traditional money theft from Bitcoin exchanges?

(Asked by: username_0 on 2012-05-23)

There have been [a number of cases of thefts or losses of Bitcoins from a few Bitocoin exchanges](https://bitcoin.stackexchange.com/a/3719/323), but has there ever been a case of traditional currency being stolen or lost by an exchange?

**Tags:** exchanges, history, theft, loss, money


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## 3 answers

### Answer by username_1 on 2012-05-24. Score: 3 | Accepted answer

It is unlikely you'ld find an exchange that hasn't lost funds due to theft.

Mt. Gox, before Tibanne bought it, used to accept PayPal for payment. It was fraudulent PayPal transactions that assisted in driving the exchange rate from $0.06 per BTC (yes, that is correct) in October, 2010 [to a level twice that](http://bitcoincharts.com/charts/mtgoxUSD#rg60zczsg2010-10-01zeg2010-10-14ztgSzm1g10zm2g25) in about two days. PayPal closed the account and froze the funds, but the thief had withdrawn bitcoins.

BitcoinGateway (now defunct) was the next up and experienced some fraudulent credit card charges (though their credit card merchant account got yanked once the it was figured out what the term "digital goods" really meant.)

Then it was [CoinPal's turn](http://www.bitcoinmoney.com/post/5086167006) in which they battled a hack that made it appear the charge was successful, and bitcoins were paid out. Later, fraudulent charges were experienced but were maintained at manageable levels -- before PayPal closed their account and froze the funds, causing the service to shut down.

Some believe that Dwolla's actions against TradeHill (now defunct) were theft of dollars, but that was simply an accounting action where numbers for TradeHill's account with Dwolla were updated and there was not a hacking into TradeHill's systems.

Bitcoin7 (now defunct) claimed to have had to deal with a stolen bank funds at one time, I believe. I don't remember the details.

Even recently, BitPiggy, for instance, has suspended service due to their bank feezing funds after stolen monies were sent to the exchange.


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### Answer by username_2 on 2012-05-24. Score: 4

This much less likely for a number of reasons:

* Banks have advanced, robust and well-tested anti-fraud infrastructure, making such thefts much more likely to be detected.
* Legally it is much much easier to prosecute for fraud cases in fiat than BTC (I do not know any prosecution over stolen Bitcoins)
* Fiat transactions are reversible meaning the exchange could easily get its money back
* Bitcoins are much easier to launder, so thieves are less likely to get caught


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### Answer by username_3 on 2012-05-23. Score: -1

Sure. Payments in traditional currencies are fraudulently made and/or fraudulently reversed all the time.
This is effectively theft of that currency from the exchange.

> **Comments:**
> **username_0**: I was thinking more about someone hacking into some exchanges' mainframes and requesting unauthorized payouts from their accounts, rather than people doing chargebacks. Asides that, do you have any data to support your answer?  

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