Bitcoin Update: Some Instawallet Users Will Not Get Refund After “Bank Robbery”

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According to the co-founder of the Bitcoin service “Instawallet”, everyone will get a refund, except for those who were storing more than 50BTC in their account, roughly .5% of total users.

bitcoin_currency (Copy)By JG Vibes
dev-test.intellihub.com
April 5, 2013

As we reported yesterday a service called “Instawallet” that stores Bitcoin online for people to make transactions has been hacked and is currently offline.  As of yesterday it was assumed that all accounts would be honored, judging by a notice posted on their home page.

Now a forum post from the co-founder of Paymium, the company behind Instawallet, is suggesting that not all users will get their Bitcoin back, people like myself who had under 50 Bitcoin in their account will be fine, but anyone with over 50 will lose out.

As I mentioned yesterday it is important to be clear that Bitcoin was not hacked, although there are many mainstream disinformation pieces that are making this suggestion.  In traditional banking terms, see this as more of a bank robbery instead of a hacking or  disrupting of an entire currency.  People who were smart enough not to have their Bitcoins on an external server have nothing to worry about with this security breach.

The message read in full:

Dear Instawallet users,

I am a co-founder of Paymium, the company behind Instawallet.

We have now finished our analysis of the events that lead to the suspension of the service.
An intruder was able to access the instawallet database. As a result, all “hidden” urls, i.e wallets, have been compromised and are no longer safe to store bitcoins.
Funds were stolen: a police report was filed by Paymium with BEFTI (Brigade d’Enquêtes sur les Fraudes aux Technologies de l’Information, a unit of the French “Police Judiciaire”) and an investigation is in progress.
Computer forensic analysis is in progress with independent auditors.
We will be able to refund all instawallet balances up to 50 BTC per wallet.
In the next few days we are going to open the claim process for Instawallet balance holders to claim the funds they had stored before the service interruption.

Important information on claims submission:

1. For the first 90 days we will accept claims for individual Instawallets. Your wallet’s URL and key will be used to pre-populate a form to file the claim.

2. After 90 days, if no other claim has been received for the same url, your Instawallet balance under 50 BTC will be refunded.
If several claims have been filed for the same url, we will process those claims on a case by case basis, under the presumption that the claim we received first belongs to the legitimate balance holder.

3. Claims for wallets that hold a balance greater than 50 BTC will be processed on a case by case and best efforts basis.
The number of such wallets represents less than 0.5% of the number of funded wallets in our records.
In other words, 99.5% of instawallets will be fully refunded.

If you file a claim with Paymium, please do not contact us regarding your claim until the 90-day period has elapsed.
We will need to wait the end of the period to send the refunds as some people might have forgotten about their instawallet and need time to retrieve it.

Thanks for your patience and understanding.

 
—-
 
It looks like i am in luck, my .5 Bitcoin will be refunded, i will just have to pay close attention to the claims process.

******

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J.G. Vibes is the author of an 87 chapter counter-culture textbook called Alchemy of the Modern Renaissance, a staff writer, reporter for dev-test.intellihub.com and Executive Producer of the Bob Tuskin Radio Show. You can keep up with his work, which includes free podcasts, free e-books & free audiobooks at his website www.aotmr.com

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