2013-04-03: Instawallet BitCoin Service Offline After Database Breach
Level Three Attack
Instawallet has taken themselves offline after detecting fraudulent access to their database. They are working on reengineering their system as they are unable to continue the service under its previous architecture.
They have announced a planned period of 60-90 days for reclamation of wallets, in the hopes of fairly reuniting people with their bitcoins and avoiding as much conflict and arbitration as possible.
Because they managed many BitCoin wallets, this could potentially be a high-stakes incident - which is why I'm assigning it a Gibson Level Three rank. If actual financial damages are revealed, it could be boosted to a Level Four rank. As it stands, many users are inconvenienced for the next 60-90 days as Instawallet works to fairly restore access to the potentially compromised wallets.