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ShapeShift Down After Bitcoin Hot Wallet Security Breach

Photo: Bloomberg

ShapeShift, a service that allows users to instantly cross-convert over 40 cryptocurrencies, has been down over the weekend with a notice on the site that it will likely be down for a few days for an infrastructure upgrade. This has lead some traders to speculate in online forums that ShapeShift is trying to shield itself from the drop in the price of Ethereum (down 25% this week) but the real reason seems worse.

As is all too common in the cryptocurrencies scene, ShapeShift was hit with a hacking attempt that hurt its holdings. In this case the company claims that no clients funds were compromised and that it will soon return only bigger and better after improving its defenses. Unfortunately in previous cases of hacking the affected companies eventually failed to recover, but the ShapeShift team explains that they have prepared for such an attack and took precautions to protect the business and its clients.

Erik VoorheesErik Voorhees, the CEO of ShapeShift, made this statement on the situation: “We noticed several pieces of evidence indicating our server infrastructure was compromised and threatened. We made the decision to scrap that infrastructure, and rebuild in a wholly new and safe environment. This is what we are currently engaged in. While we hate having the service offline, it was the safer path.

By design, ShapeShift doesn’t hold customer balances, so even in the case of a security breach, there is no customer money at risk. However, a portion of our own hot wallet inventory funds were taken, but nothing that will interfere with operations once our new environment is online. This is also by design.

We’ve built customer protection into our platform – hacks may be inevitable, but customer losses should not be. Not a cent of customer funds was lost, nor could they have been. For those few customers who had a pending order processing with us when we went offline, we’ll get those funds returned to you within 24 hours.

Existing in Bitcoinland is a pioneering struggle against many threats and challenges. We’ll use the opportunity to build even bigger, better, and more resilient infrastructure. We’ve been inspired by the immense growth ShapeShift has seen over the past several months, and will get this beast back online ASAP.”

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