Korean Exchange Bithumb Loses $31M in Hack, Halts All Withdrawals

Bithumb announced on 20 June 2018 that it was hacked overnight, resulting in the loss of KRW 35 billion (USD 31 million) of cryptocurrency. For the time being, all cryptocurrency and fiat withdrawals are frozen, and Bithumb urges customers not to deposit any cryptocurrency since all of Bithumb’s digital assets have been moved into cold storage for safety. Bithumb says that it will cover the losses from its own money so customers don’t have to worry, and the exchange will re-open after a process of security review and enhancement.

Bithumb is the biggest cryptocurrency exchange in Korea with daily trading volume near USD 400 million, making it the 6th largest in the world behind Binance, OKEx, Huobi, Bitfinex, and Upbit. A total of 37 different cryptocurrencies are traded on Bithumb, so depending on which coins were stolen, it might take some time for the exchange to re-acquire customer’s cryptocurrency.

This is the second time in June 2018 that a South Korean cryptocurrency exchange has been hacked. A little over a week ago on 11 June, Coinrail was hacked, losing USD 40 million of cryptocurrency. Coinrail is a much smaller exchange than Bithumb and was ranked only 90th in the world with daily trading volume of USD 2 million, so the hack was too much for the exchange to handle and it remains disabled as of this writing. The Coinrail hack was blamed by many as the impetus for a 10% decline in Bitcoin’s price on the same day.

The news of the Bithumb hack is breaking as of this writing so market impact remains to be seen, but already Bitfinex has dropped by over USD 100, roughly a 1.5% price move. Bad news like a major cryptocurrency exchange being hacked has been known to cause steep negative movements in the Bitcoin market in the past, so the drop probably isn’t over.

It was reported earlier in 2018 that long-time feuding neighbor North Korea has been actively hacking cryptocurrency users and exchanges in South Korea as a means to obtain cryptocurrency so that they can circumvent international sanctions. No doubt there will be some speculation that North Korea might be the reason two South Korean cryptocurrency exchanges have been hacked in such rapid succession this month.

 

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