Bitfinex, a Hong-Kong based digital currency exchange, halted trading, withdrawals and deposits after announcing a security breach leading to the theft of close to $70 million worth of Bitcoins. The company has not released the total damage, but one of its employee posted on Reddit that the total Bitcoins stolen by hackers was 119,756.
Bitcoin tanks after Hong Kong exchange ‘hacked’: A major Hong Kong-based Bitcoin exchange has suspended trading…
— BethB (@BBthy) August 3, 2016
Bitfinex stated that it has reported the hack to law enforcement agencies, while a statement from the company claims that” We are undertaking a review to determine which users have been affected by the breach. While we conduct this initial investigation and secure our environment, bitfinex.com will be taken down and the maintenance page will be left up.”
The fall of Bitcoin
After the devastating news, Bitcoin market value declined by over 20% and reached a low of $480 from a high of $613 on Tuesday. The drop in price is unclear but the most likely reason is that Bitcoin investors are nervous now over the threat of potential hacks on other digital exchanges.Investor’s are selling off their Bitcoins, leading to the massive price drop.
Following the hack, many exchanges are anticipated to automatically restrict the amount of Bitcoin that can be withdrawn in a single transaction to limit losses in case of a hack. In addition to this, Bitfinex stated on Reddit that it has placed limits to restrict the amount of Bitcoins that can be withdrawn and also investigating the hack at the same time.
LOL @ the babyboomers in my country screaming (again) BITCOIN IS HACKED OHNOES BACK TO GOLD GUYS CUZ NO CORRUPTION THERE!!! (1)
— DigitalCapone (@Digital_Capone) August 3, 2016
Reminds me of a TV Show
Last year, Bitfinex disclosed a partnership with BitGo, a Palo-Alto based company that offers multiple-signature security. Bitfinex stated that after this partnership, it had enforced a two-step authentication, which includes bypassing Bitfinex and then BitGo, and the hackers needed to compromise both institutions before getting to the funds. However, it remains unclear how hackers bypassed this authentication and stole over $65 million.
This Bitcoin breach should remind readers of a certain TV show that simulates a similar hack, where a cyber-security company is hacked by cyber activists to get access to a multi-billion dollar corporation’s servers. For all of you who haven’t watched the psychological tech drama Mr. ROBOT, you will love it.
The biggest theft in Bitcoin history comes only two months after cyber-criminals stole $60 million worth of Ethereum (Bitcoin’s rival crypto-currency) in June. In 2014, an attack similar to Bitfinex was seen at Mt. Gox, a Tokyo-based Bitcoin exchange,which also caused massive uncertainty amongst BitCoin investors. Hackers stole almost $650 million Bitcoins from Mt. Gox, which forced the exchange to file for bankruptcy.
Bitfinex executive says 119,756 bitcoin stolen from Hong Kong exchange https://t.co/U8BBCSjYJv
— Reuters Business (@ReutersBiz) August 3, 2016