Thumbs down for $31.5M Bithumb cryptocurrency exchange heist

Thumbs down for $31.5M Bithumb cryptocurrency exchange heist

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Bithumb hacked for $31.5 millionLate Tuesday night, South Korean cryptocurrency exchange Bithumb was hacked, resulting in the loss of an estimated $31.5 million in customer cryptocurrency.

As soon as it learned of the breach, Bithumb moved quickly to stop deposits, withdrawals and trading.

The impact on cryptocurrency trading values was immediate as altcoins tumbled and bitcoin dropped quickly causing a loss of billions in minutes. Two days later, altcoins are struggling, and bitcoin has plunged further.

What happened at Bithumb?

Bithumb hacked, loses $31.5 millionLate on June 16, Bithumb noticed abnormal trading and moved significant amounts of Ethereum to its cold wallets as a safety precaution. It began checking servers

With security processes completed, on the evening of June 19 the exchange firewall was hacked, and more than 35 billion won ($31.5 million) in cryptocurrency stolen.

The company issued a statement early in the morning on June 20 saying that the remainder of company assets were moved to cold wallets for security. In a statement translated from the Korean language on their website, the company said it will make good for any clients affected:  “We will cover the entire amount of stolen passwords with company ownership.”

2nd South Korean exchange hacked earlier

Coinrail loses $40 million to hackers.Only 10 days earlier, smaller South Korean cryptocurrency exchange Coinrail was hacked and $40 million stolen from clients. This so-called “flash crash” wiped out $15 billion in cryptocurrency market value in just two hours and the markets were trying to recover from that impact.

Fortunately, Bithumb’s quick response and commitment to repay customers affected appears to have helped minimize the impact on bitcoin prices.

Bithumb will now work closely with the Korean government, regulators and law enforcement officials to determine what happened and how to prevent another incident in the future.

Sorry is not enough

Cryptocurrency security needs dramatic improvementCryptocurrencies have lost more than $350 billion in value since the start of 2018 partly due to the impact of security flaws at cryptocurrency exchanges big and small. The roller coaster ride is far from over.

In a MarketWatch interview, Naeem Aslam, chief market analyst at Think Markets said, “It’s critical that exchanges deploy top-notch security as it’s stricken confidence from the market.” He added, “It’s beyond ridiculous, and I think regulators should increase pressure on exchanges with regards to security.”

While Bithumb issued a standard crisis management statement that “it is taking steps to prevent a repeat of the incident”, sorry is not enough.

Cryptocurrency exchanges need to be the highest level of security and unfortunately, investors are still at more than acceptable risk.

Author: Jeff Domansky, Managing Editor