South Korea's Bithumb loses $31.5m in cryptocurrency heist

The South Korean cryptocurrency exchange Bithumb said 35bn won ($31.5m) worth of virtual coins were stolen by hackers, the second local exchange targeted in just over a week as cyber thieves exposed the high risks of trading the digital asset.

Bithumb said in a notice on its website that it had stopped all trading after ascertaining “some cryptocurrencies worth about 35 billion won were seized between late yesterday and early morning today”.

The Bithumb theft highlights the security risks and the weak regulation of global cryptocurrency markets. Global policymakers have warned investors to be cautious in trading the digital currency, given the lack of broad regulatory oversight.

In Ho, a professor at Korea University’s Blockchain Research Institute, said the stolen coins were most likely to be from the more insecure ’hot wallets’.

“Since coins in the cold wallets are not at all wired to the internet, it would have been impossible for hackers to steal those in cold wallets unless they physically broke in,” said In, a blockchain expert at the research centre.

Bithumb did not immediately respond to Reuters’ request for comments and its statement did not say whether the stolen coins were stored in its “hot wallets”.

Mun Chong-hyun, the chief analyst at ESTsecurity, said digital coins would continue to be targets for hackers around the world.

Crypto Exchange Bithumb Hacked, Loses $31.5M
By Daniel Liberto | June 20, 2018 — 6:34 AM EDT
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South Korea-based cryptocurrency exchange Bithumb has confirmed that virtual currency worth about $31.5 million has been stolen by hackers.

Bithumb, the sixth-busiest cryptocurrency exchange in the world according to Coinmarketcap.com, posted a notice on its website warning that it had stopped all trading after becoming aware that “some cryptocurrencies worth about 35 billion won were seized between late yesterday and early morning today.”

On Twitter, the Seoul-based operator, which trades more than 37 different virtual coins, said that it would fully compensate customers from its own reserves. The firm also added that all user assets are now being stored in “safe cold wallets” that are not directly connected to the internet.

“Due to the increasing safety issues, we are changing our wallet system,” Bithumb said on Twitter. “All deposit and withdrawal service will be stopped to make sure the security. We will keep notice you of the restart of the service. We apologize for your inconvenience and thanks for your understanding.”

Another Blow for Cryptocurrencies
After Bithumb’s tweets were published, the price of bitcoin fell from about $6,718.35 to as low as $6,561.79, according to CNBC and CoinDesk's price index. By 4:45 AM EST, the price of bitcoin recovered slightly to reach $6,632.30

Ethereum also tumbled following news of the heist, according to CoinDesk data, before paring some of its losses. (See also: What Happens If the Price of Bitcoin Crashes?)

The Bithumb theft came just weeks after hackers stole about $37 million from South Korean crypto exchange Coinrail and several months after more than half a billion dollars-worth of digital currency was taken from Japan’s exchange Coincheck.

Some media commentators blamed the recent sell-off in cryptocurrencies on the Coinrail heist, even though the South Korean firm was only ranked the 99th largest crypto exchange in the world in terms of trade volume. Sentiment in cryptocurrencies has also come under pressure from reports that U.S. regulators are investigating potential price manipulation at four major cryptocurrency exchanges.