LocalBitcoins

On January 26, 2019, LocalBitcoins, a Finland-based peer-to-peer Bitcoin trading platform, became the latest casualty in the crypto world’s relentless string of cyberattacks, exposing the fragility of even well-established services. At approximately 10:00 UTC, a security breach, stemming from a third-party forum software, enabled hackers to infiltrate a handful of user accounts, as announced on Reddit and reported by CoinDesk. The attack, suspected to involve a phishing scheme that mimicked the platform’s forum to steal two-factor authentication (2FA) codes, compromised at least six accounts, with one Reddit user, u/BitcoinVictim, recounting how their wallet was “wiped clean” within moments of a failed 2FA login attempt.

The exact amount stolen remains undisclosed, but the breach’s limited scope spared LocalBitcoins’ broader user base of over 8 million, per CoinMarketCap data. Swiftly disabling outgoing transactions and the forum feature, LocalBitcoins contained the damage, restoring platform functionality soon after and urging users to activate 2FA, ironically the very mechanism exploited. The platform, processing $2 billion annually, collaborated with authorities, though 2019’s regulatory landscape yielded no reported fund recoveries or arrests. Twitter buzzed with user caution, with @CryptoSkeptic warning against 2FA use until security was assured, while others speculated about insider risks. The incident, echoing phishing-driven hacks like Cryptopia’s earlier that month, underscored the perils of third-party integrations, sparking calls for end-to-end encryption, rigorous software audits, and user education on phishing defenses to bolster trust in the decentralized crypto ecosystem.