Popular South Korean cryptocurrency exchange Bithumb has suspended all deposits and withdrawals following a hack resulting in the theft of more than $31 million worth of cryptocurrencies. This marks the second Korean exchange hack in as many weeks.
Seoul-based cryptocurrency exchange Bithumb – currently the sixth largest exchange in the world by trade volume – announced shortly before 9 AM local time Wednesday that more than 35 billion won ($31.5 billion) worth of cryptocurrencies had been stolen from the platform in an apparent hack. Deposits and withdrawals on the exchange have been halted while they change out their wallet system to address safety and security issues.
[Notice for the temporary suspension of the deposits]
Due to the increasing safety issues, we are changing our wallet system.
Please do not deposit until we notify.
*All deposits are not deposited into your wallet until all changes are completed.
— Bithumb (@BithumbOfficial) June 20, 2018
Although it is not yet known which cryptocurrencies were stolen, Bithumb was quick to assure customers that their funds have been moved to secure cold wallets and that any losses resulting from the theft would be reimbursed from the exchange’s own reserves.
The Cryptocurrency Market Reacts
The cryptocurrency market reacted swiftly to news of the Bithumb hack, with Bitcoin prices and total market cap both down by more than two percent within a half hour of the announcement.
South Korea has been the target of two cryptocurrency exchange hacks in the past two weeks alone. Coinrail, a smaller exchange in the Asian country, was also hacked, resulting in a loss of around $40 million worth of cryptocurrencies.
This is the second hack Bithumb has suffered in less than a year. In July of last year, an employee computer was compromised, leading to “tens of millions” of won being stolen.
Charlie Lee weighed in on the hack on Twitter:
Another day, another hack. Hopefully BitThumb is able to cover this amount, though $30MM is not a small amount.
As I’ve said many times, be smart and only keep on exchange coins that you are actively trading. It’s best to withdraw right after trading. https://t.co/8YpVcHx8tK
— Charlie Lee [LTC⚡] (@SatoshiLite) June 20, 2018
Thousands – if not millions – of cryptocurrency users store their funds in third-party custodial wallets, and this hack serves as a reminder to everyone of how important it is to store your coins in a wallet you control. Otherwise, you’re relying on a third party to keep your funds safe. As cryptocurrency prices increase, exchanges will no doubt find themselves increasingly targeted by hackers looking for an easy score.
Thankfully, Bithumb has the means and the willingness to compensate its customers for their losses, but such is not always the case. This should serve as yet another cautionary tale of why exchanges need to go to greater lengths to ensure the integrity of their systems and the safety of user funds.
What are your thoughts on the recent spate of exchange hacks? How will this affect the cryptocurrency market, given that Bithumb intends to reimburse its customers? Let us know in the comments below.
Images courtesy of Shutterstock
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