Bitcoin Burglary: Hackers 'Rob Online Bank'

An Australian man who operates a virtual bank for holding digital currency has claimed hackers stole more than Aus $1m (£788,000) of bitcoins from his website.

The man, known only as TradeFortress, said about 4,100 bitcoins he was holding for his website's users were stolen from his site in two hacks.

TradeFortress, who told the Australian Broadcasting Corporation that he was over 18 but "not much over", has denied taking the coins for himself, but said he would be unlikely to report the theft to police because bitcoin transactions are virtually impossible to trace.

"The police don't have access to any more information than any user does when it comes to bitcoin," he told the broadcaster. "Some say it gives them control of their money."

The bitcoins were being held on servers on the US, according to TradeFortress.

Bitcoins are a four-year-old digital currency increasingly used to make payments in online transactions and growing in popularity, especially in San Francisco, Berlin, and Argentina.

The virtual currency, invented by an anonymous computer scientist known only by the pseudonym Satoshi Nakamoto, is unregulated by any government in the world.

Because the currency can be transferred directly between smartphones or any other type of computers, regulators have raised concerns that it will be used for criminal or terrorist activities.

The Sydney Morning Herald said the theft occurred from TradeFortress' "wallet service" through the website Inputs.io , which offered to keep bitcoins secure, on October 26, but he only told his customers this week.

In an email interview with Fairfax media, TradeFortress said he would try to refund some of the money using more than 1,000 bitcoins he personally owned.

"Users are being repaid up to 100% depending on the amount (sliding scale), generally 40-75 per cent," he said. "I won't have any bitcoins left after this, except for a small amount of commemorative physical coins."

In a message on the Inputs.io website, he said: "I know this doesn't mean much, but I'm sorry, and saying that I'm very sad that this happened is an understatement.

"Please don't store bitcoins on an internet-connected device, regardless of it is your own or a service's."

Although bitcoins are an online currency they can be stored elsewhere, held on an offline computer or details simply written down on a piece of paper.