Another Korean hack sends shudders through crypto markets
As crypto exchange Bithumb suspends trading after losing $30 million, global markets 'flash crash' but then show signs of recovery
South Korea’s second largest crypto-currency exchange by trade volume, Bithumb, today posted a message on its Twitter feed – early morning in Asia – notifying customers that it had been the victim of crypto-currency theft.
The news sent another predictable shockwave through the crypto community and a selloff ensued that resulted in almost $10 billion leaving crypto markets in just over an hour.
Bitcoin lost around 2.2% in the dump, which in the grand scheme of things is nothing unusual. Most of the other altcoins suffered heavier losses in the short space of time, with many of them shedding over 5%. The markets seemed to have leveled out my early afternoon, Korea time, and appear to be holding off further declines for now.
Bithumb’s Twitter announcement informed customers that some of the exchange’s crypto-currencies, “valued about $30,000,000, was stolen. Those stolen cryptocurrencies will be covered from Bithumb and all [the] assets are being transferred to cold wallet [an offline storage method].”
The exchange went on to “urgently ask our valuable customers not to deposit any funds into Bithumb wallet addresses for the time being” and trading was then suspended.
Bithumb usually handles around half a million dollars in daily trade so the loss of $30 million is not a huge figure, especially when compared to the Coincheck hack in January that resulted in over $530 million being stolen from the Japanese exchange.
Currently, it remains to be seen whether the loss was the result of an external cyber intrusion, or an internal network error due to a scheduled update in the wallet system, with the ever-imaginative crypto social media groups already speculating that it could have been the work of an insider. According to Korean news site, eToday, Bithumb had an outstanding bill for around $28 million in back taxes – a very similar figure to what it just announced had been stolen.
South Korean exchanges have regularly been attacked by hackers but this time Bitmain quickly agreed to reimburse any losses, which could be why markets are already starting to show signs of recovery. Losses over the past 24 hours are around 1%, which is actually an every-day movement for crypto markets.
To put this in some context, over the past month the total market capitalization for all crypto-currencies has lost 27% and has dropped from $390 billion to now hover around $280 billion.
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