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$30 Million Lost After Attack on Bithumb

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The South Korean cryptocurrency exchange Bithumb has been hit, once again putting the security of virtual currencies into focus. About 35 billion won or about US$30 million were lost according to the company.

The stolen coins were most likely stored in hot wallets, which are connected to the internet. All trading has been suspended as the company investigates the intrusion.

A notice posted on Twitter urged users not to make deposits. “Due to increasing safety issues, we are changing our wallet system,” the post said.

The coins were stolen between late Tuesday and early Wednesday morning according to the exchange.

Bithumb has also assured its customers they will be reimbursed for the lost coins. At the same time, the company reported all customer funds are now stored in cold wallets, which are not connected to the internet.

Questions about security of virtual assets

Coming only weeks after a similar attack on CoinRail, the theft once again raises questions about how online wallets operated by exchanges are secured. South Korea has one of the most robust and strictly enforced cryptocurrency regulations. Authorities regularly conduct physical inspections on exchanges to ensure compliance.

Some of the measures include the requirement to use same name bank accounts. Anonymous bank accounts for cryptocurrency trading are banned.

While this is the case is South Korea, virtual currencies are still widely unregulated across the world. However, efforts for more regulation are currently being led by institutions such as the IMF and the G7 group of countries.

The current state of affairs means that customers often do not have recourse in law when their funds are lost.

The anonymous nature of most virtual currencies further complicates the situation as it makes tracing difficult.

Warnings against cryptocurrency trading are often premised on such issues as well as concerns over money laundering and terrorism financing.

Spate of attacks

This has however not been enough to halt the spate of attacks on cryptocurrency exchanges. About $30 million is thought to have been lost in the recent attack on CoinRail. But the most high profile attack this year involved Coincheck in which $530 million worth of NEM tokens were lost.

Bitcoin and other virtual currencies have slightly dropped in the wake of the news. The pioneer cryptocurrency is currently trading at $6600 on Bitfinex after going past $6700 in Tuesday’s trading.

Its recovery started late last week after more than a week of sharp declines occasioned partly by the hacking on CoinRail. About $50 billion was wiped off the market in the weekend the exchange was hacked.

South Korea is a major global hub for cryptocurrency trading with virtual currencies like bitcoin often trading at a premium. Earlier suggestions to shut down the industry were met with fierce resistance from the large cryptocurrency community there.

Bithumb is the sixth largest exchange in the world by volume according to CoinMarketCap. About $401 million have been transacted through the exchange in the last 24 hours.

The EOS/KRW pair is the most traded at $127.2 million accounting for 31% of transactions followed by TRX/KRW pair at nearly $90 million in the last 24 hours or 22% of the total volume.

BTC/KRW pair comes third with a daily volume of $40 million or just 10% of the total volume in the last 24 hours.

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