Bitcoinica Hack (Phase I)
The first blow to the Bitcoinica exchange, resulting in the loss of 43,000 BTC via the Linode breach.
On March 1, 2012, the high-leverage trading platform Bitcoinica suffered its first catastrophic loss as part of the wider Linode Hack. Attackers compromised the web host's customer service portal, resetting the root passwords for Bitcoinica's servers and draining over 43,000 BTC from their hot wallet.
This event is distinct from the later hacks in May and July because Bitcoinica survived it—barely. The operators promised to repay users from their own profits, a decision that kept the platform running on "fractional reserve" status for months. It was a seminal lesson in the dangers of custodial leverage trading; users learned that their "profits" were just database entries backed by an increasingly insolvent entity.