Following the sudden disappearance of bitcoin exchange Mt. Gox, researchers from Dell SecureWorks have warned that over 100 malwares designed to steal the virtual currency from bitcoin wallets, have been spotted lurking around.
Speaking at the RSA Conference that ended on Friday, the researchers from the Atlanta-based SecureWorks warned that bitcoin owners who store their digital currencies for easier trading are at greater risk of attracting malware. "With bitcoins and altcoins, you're essentially acting as your own bank," said Joe Stewart, director of malware research at SecureWorks in an interview with Computerworld.
Agrees Pat Litke, a security analysis advisor at the company's Counter Threat Unit (CTU). "We counted more than 100 unique families of bitcoin malware," said Litke. Many of them appeared in June [2013] as the value of bitcoin went up," Litke said.
The picture painted by the researchers aren't exactly rosy, especially in the light of Mt. Gox, a major bitcoin trading exchange, filing for bankruptcy in a Japanese court, after hackers allegedly stole approximately 850,000 bitcoins, worth nearly $480 million at current values of bitcoin at $565.
The woes of bitcoin community get worse as a U.S. senator has also called for the ban of the cryptocurrency, calling it "dangerous," "disruptive" and "unstable."
Senator Joe Manchin of West Virginia has sent a letter to the Federal Reserve, Treasury Department, and other regulators, expressing his worries about the unstable and unregulated cryptocurrency used for alleged illicit activities.
"This virtual currency is currently unregulated and has allowed users to participate in illicit activity, while also being highly unstable and disruptive to our economy," said Manchin.
"The very features that make Bitcoin attractive to some also attract criminals who are able to disguise their actions from law enforcement. Due to Bitcoin's anonymity, the virtual market has been extremely susceptible to hackers and scam artists stealing millions from Bitcoins users. Anonymity combined with Bitcoin's ability to finalize transactions quickly, makes it very difficult, if not impossible, to reverse fraudulent transactions," the senator added.
The democrat cites the banning of the virtual money in countries like China and Thailand. He pointed out that South Korea rejects the idea of the bitcoin being a legitimate currency while European Union has endorsed its regulation, if not total banning.
"I am most concerned that as Bitcoin is inevitably banned in other countries, Americans will be left holding the bag on a valueless currency," said Manchin, who is a member of the banking committee of the U.S. Senate.
The senator's concerns also hold water with bitcoin being involved in a series of controversial issues of late. In February, about $2.6 million worth of bitcoins were stolen from the systems of Silk Road 2, a reincarnation of the popular site Silk Road that has been allegedly involved in money laundering and illegal drugs trade. Russia and China have also expressed their worries about the unstable value of bitcoin and imposed rules to protect their citizens.
"There is no doubt average American consumers stand to lose by transacting in Bitcoin. As of December 2013, the Consumer Price Index (CPI) shows 1.3% inflation, while a recent media report indicated Bitcoin CPI has 98% deflation. In other words, spending Bitcoin now will cost you many orders of wealth in the future. This flaw makes Bitcoin's value to the U.S. economy suspect, if not outright detrimental," the senator pointed out.
Manchin's recommendation follows the fall of Japan-based firm Mt. Gox where around 744,408 bitcoins that is roughly valued at around $350 million have been stolen or lost due to technical issues.
"Before the U.S. gets too far behind the curve on this important topic, I urge the regulators to work together, act quickly, and prohibit this dangerous currency from harming hard-working Americans," said Manchin.
Regulators in the U.S. and Japan have launched separate investigations Wednesday to find out what really happened to Mt. Gox. The CEO of the troubled bitcoin exchanged released a statement that he is still in Japan.
"As there is a lot of speculation regarding MtGox and its future, I would like to use this opportunity to reassure everyone that I am still in Japan, and working very hard with the support of different parties to find a solution to our recent issues," said Mt. Gox chief executive Mark Karpeles.
Resolving bitcoin issues cannot be solved by the toss of a coin. Mt. Gox customers need their money back and if the federal government will respond to regulate the virtual currency, new laws must be enacted. Manchin's position is loud and clear - throw Bitcoin into the well and forget about it.
