Bitcoin company Bitpay was hacked for 5,000 BTC, and the insurance company was sued

According to a lawsuit filed in federal court in Atlanta on September 15, Bitcoin payment company Bitpay was hacked for more than $1.8 million in Bitcoin. Bitpay tried to get its insurance company to cover $950,000 in losses, but the insurance company refused to pay the money. Currently, Bitpay is suing the insurance company.

As early as December 2014, Bitpay Chief Financial Officer Bryan Krohn received an email requesting Krohn to comment on a Bitcoin industry document.

Unknown to Crone and Bitpay, the email sender’s computer had been hacked, and the hackers directed Crone to a website they controlled via a phishing email, after which Crone provided his Bitpay corporate email account credentials, according to the lawsuit.

“After capturing Mr. Krohn’s Bitpay account credentials, the hackers used that information to gain access to Mr. Krohn’s email account and fraudulently transferred $1.85 million worth of Bitcoin,” the lawsuit states.

According to court documents, the bitcoins were transferred in three separate transactions totaling 5000 BTC.

The fraudster logged into Krohn’s email account and, after reviewing Krohn’s correspondence, learned the specific details of how Bitpay conducts business. The fraudster then used the email account to send an email to Bitpay CEO Stephen Pair, asking him to transfer 1000 BTC to a Bitpay user’s wallet, which Stephen did.

Soon, Stephen received a second email asking him to transfer another 1000 BTC. Stephen transferred the money without saying anything.

The next day, the fraudster sent another email to Stephen, asking him to send 3000 BTC to the client. This time, Stephen wrote back to ask 'Kron' to confirm the request, and the fraudster replied that the transaction was valid. Stephen then sent the 3,000 BTC.

Of course, it wasn’t long before the scam was exposed, and Bitpay CEO emailed a real customer of Bitpay (SecondMarket), who responded by saying that they had not purchased any Bitcoin.

Bitpay tried to get its insurance company to cover $950,000 in losses, but in June, the insurance company refused to pay the money. Bitpay is currently suing the insurance company.

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