The company is suspending its services indefinitely, and will be refunding all balances of 50 Bitcoins or less.
"In the next few days we are going to open the claim process for Instawallet balance holders to claim the funds they had stored before the service interruption," the company stated in a notice on its Web site.
The company also listed the following information regarding the claims process:
- For the first 90 days we will accept claims for individual Instawallets. Your wallet's URL and key will be used to pre-populate a form to file the claim.
- After 90 days, if no other claim has been received for the same url, your Instawallet balance under 50 BTC will be refunded. If several claims have been filed for the same url, we will process those claims on a case by case basis, under the presumption that the claim we received first belongs to the legitimate balance holder.
- Claims for wallets that hold a balance greater than 50 BTC will be processed on a case by case and best efforts basis.
It's not clear from the company's announcement how the service was breached, or how many Bitcoins were stolen. As The Hacker News notes, this is just one of several recent attacks on Bitcoin services -- $250,000 was stolen from BitFloor last fall, and $90,000 was taken from Bitcoinica last May.