Bitcoin price drops as cryptocurrency exchange Bithumb is hacked

Bitcoin price drops as cryptocurrency exchange Bithumb is hacked

The exchange announced on Wednesday morning in Asia that it has been hacked and 35 billion won (US$31.5 million) worth of virtual coins were stolen.

The events mark further difficulties for the company - which saw multiple attacks in 2017 - and for South Korea's booming cryptocurrency exchange sector, which earlier this month saw fellow operator Coinrail lose $40 million to hackers. News of an exchange hack normally sees a sharp fall in prices for all cryptocurrencies, but this time, it was a more modest fall of just 3%. South Korea's Omnitel Inc. and Vidente Co. retreated at least 9 percent.

On June 20, Bithumb had retracted its announcement that $30 million was hacked from its exchange, leading investors to panic.

The platform added that the stolen money will be covered by the exchange's reserves, and customer assets have been transferred to a cold wallet that stores cryptocurrencies in an offline environment that is not accessible via the internet.

Bithumb said that it reported the theft to the Korea Internet & Security Agency and that officials there are investigating.

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The company has reacted by moving all of its users' assets to "cold storage", and placing a temporary block on all withdrawals and deposits. The Coinrail hack coincided with a significant dip in the prices of cryptocurrencies, with Bitcoin losing $1,000 in a matter of hours.

Bithumb is thought to be the sixth largest exchange in the world based on its trading volume of over $370m. There is a trending problem with online wallet security, a lack of urgency in protecting funds, and waning confidence in the cryptocurrency markets.

That said, the decline also coincided with a broader crypto sell-off that followed a Wall Street Journal report that said USA regulators were investigating potential price manipulation at four major cryptocurrency exchanges.

If the exchange does not protect the coins well enough and gets hacked, it doesn't really change the fundamentals of the coin they are protecting.

Thursday, the Bithumb team officially confirmed that it has lost $30 million in its hacking attack and its developers and security team have started the recovery process of customer assets.

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