In another high-profile hack, centralized exchange Bithumb suffered a loss of $31 million dollars. The attack came in late June and the stolen funds included many of the top coins. This is not the first hack for the South Korean exchange, which lost approximately $1 million to hackers in the summer of last year.
Bithumb is the leading exchange in South Korea, a country where cryptocurrency’s legality status has been in flux. The local government recently announced that they would be fully legalizing the industry, but only after a contentious first half of the year. Alongside threats of a complete ban, the South Korean government also vastly restricted trading and initial coin offerings after the late 2017 bubble.
Bithumb’s Damage Control Efforts
Immediately following news of the hack, Bithumb suspended all deposits and withdraws. This ensured that the majority of stolen funds remained on the exchange, greatly increasing the possibility of recovery. Although trades could continue, within the exchange, no funds could be sent to other markets. The exchange released a list of the coins affected by the hack, with the majority of the loss in Bitcoin.
In the two weeks since the attack, Bithumb worked tirelessly to recover the lost funds – while making clear that they would reimburse users for the losses. To date, almost half of the stolen funds have been recovered. The swift response and rapid recovery of stolen assets is welcome in the face of other recent hacks, where sluggish responses may have jeopardized recovery.
Other Notable Cryptocurrency Hacks
In addition to the current and previous Bithumb hacks, the industry is facing an increasingly concentrated assault. As the overall value of cryptocurrency rises, it attracts both new investors – but also more unsavory attention. Certainly the most impactful hack to date is the Mt.Gox fiasco of 2014 that left the market in dire straits. While the industry has since recovered, aftershocks are still known to impact the price of Bitcoin.
More recently, the BitGrail exchange lost $150 million worth of the cryptocurrency Nano. Although the situation remains somewhat hazy, accusations were thrown between BitGrail’s operating and Nano development teams. Nano withdraws were suspended or offered in other currencies, and finally a partial refund was offered in the form of BitGrail Shares (BGS).
Meanwhile, the loss of over $400 million in NEM from the Japanese Coincheck exchange may very well have impacted their government’s stance towards cryptocurrency. Although not directly linked, Japan’s stance towards cryptocurrency cooled considerably after the hack – resulting in world leading exchange Binance moving their main operations out of the country, to Malta.
Article By: Adam Stone