After experiencing what the company believes to be a breach to an older version of its system, Canada’s largest Bitcoin exchange has decided to cease operations immediately.
According to Cavirtex’s blog, none of the site’s reserves were compromised, but “the damage to the company’s reputation caused by the potential compromise will significantly harm our ability to continue to operate successfully.”
The process for the shutdown will begin with the immediate halt to any new deposits, while trading will cease to occur on March 20th, 2015 and finally withdrawals will no longer be processed after March 25, 2015.
It’s interesting to see how a site of the stature and magnitude of Cavirtex values its reputation, and how it defines “damage”. Many would consider the hack to the Mt. Gox exchange to be considerably more devastating, yet Cavirtex decided to close its doors because of this blow to its position in the Bitcoin community.
Since its inception in 2011, Cavirtex has grown into a major player in for Bitcoin in general and specifically in Canada,, but had never gained ground with the big Canadian banks due to issues with regulation and the security risks that always surround cryptocurrencies. However, despite the disconnect with the major fiat institutions in Canada, Cavirtex appeared to be thriving. That’s what makes this decision noteworthy – why quit when you’re seemingly ahead?
The hack/breach/compromise that occurred at Cavirtex seems to be rather minor considering no money or any identity documents were stolen. Could Cavirtex have taken a deep breath, beefed up its security and moved on, or was this really the impetus to cease operations?
It’s tough to say as Cavirtex possibly envisioned a future of breaches that were substantially more devastating (see: Mt. Gox), but then again it’s not so simple to turn off the lights on a company that is #1 in Canada for Bitcoin exchange. While it may have been a smart business call to quit now before tougher times, the real impact of this decision doesn’t involve the Cavirtex users, but rather other exchanges of comparable size and stature. Will they improve their security or be even more wary after seeing what has happened here?
Only time will tell whether this will be the first of many hacks in 2015 or it will inevitably be the stimulus for an overall step up in security for other exchanges and Bitcoin companies to avoid such a reality. For now, the Bitcoin community has lost a major player, and possibly a step or two in creating relationship with mainstream financial corporations.