China Power

Bitcoin Hackers Reportedly Target People’s Bank of China

A reported DDOS attack on the People’s Bank of China complicates the Bitcoin debate.

Chinese news site reported that China’s central bank, the People’s Bank of China (PBOC) has been attacked by foreign hackers. PBOC’s website and weibo account were both attacked in a move assumed to be related to the bank’s decision not to accept Bitcoin deposits. PBOC statements indicate that the website is being repaired.

Two weeks ago, China’s central bank and several regulatory agencies announced that China’s financial institutions would no longer be able to handle Bitcoin transactions. Since then, PBOC has supposedly told third-party payment processing companies to also halt any dealing in Bitcoin. According to the report, all such Bitcoin services must halt by January 31, the beginning of Chinese New Year.

On Wednesday, China’s major Bitcoin exchange, BTC China, announced that it would no longer accept deposits in China’s currency. BTC China’s co-founder Bobby Lee told the Financial Times, “As of right now, we have received notice from our third-party payment company that they will disallow customers from making deposits into our exchange.” This seems to lend credence to the rumors that China is cutting off both official and now third-party transactions involving Bitcoin.

BTC China’s announcement caused Bitcoin values to plummet by nearly 40 percent in one day, according to the New York Times. BTC China plans to continue operations, and insisted that withdrawals in renminbi would not be affected. Still, there is concern that once the rumored deadline of January 31 arrives, it will become difficult for Bitcoin holders to convert the digital currency into renminbi. Chinese media is already speculating that Bitcoin might have to leave the Chinese market altogether.

Apparently, Bitcoin users were not happy. A distributed denial-of-service (DDoS) attack was reported on the PBOC website Wednesday. According to reports from Sina, users trying to load the PBOC website beginning at 6:04 Wednesday evening received error messages. Meanwhile, the PBOC’s official weibo account was overrun with comments. Chinese media reports attributed the attack to foreign Bitcoin investors, and speculated that it was motivated by PBOC’s role in preventing Bitcoin from gaining a foothold in China’s financial market.

The hacking of PBOC’s website draws attention to the role of non-state actors in cybersecurity. As I wrote earlier, both the United States and China (among other nations) share a common interest in allowing state-sponsored cyber espionage to continue. Even if the U.S., China, and other nations could agree on established rules of the road for cyber activities, there would be no way to enforce these rules on non-state actors. In this context, the insistence that PBOC’s website was attacked by foreign hackers was interesting.  The attack could just as easily have been spearheaded by China’s domestic Bitcoin investors, who arguably have the most reason to be angry with China’s new Bitcoin regulations.

Of course, as China so often points out, cyberattacks are notoriously difficult to trace. We may never know the specific source of the PBOC attack, but it’s unlikely to endear the government to Bitcoin.