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Crypto 101 Exchange Hack

Bithumb Confirms $30 Million Theft, Full Compensation to Investors

On June 21, South Korea’s largest cryptocurrency exchange Bithumb reconfirmed that $30 million were indeed stolen but the amount could decrease after numerous recovery attempts, a day after claiming no money was stolen from the exchange, which led investors to panic.

The initial statement after the hack read:

“We checked that some of the cryptocurrencies valued about $30,000,000 were stolen. Those stolen cryptocurrencies will be covered from Bithumb and all of the assets are being transferred to a cold wallet.”

However, immediately after the statement was given out, it was retracted without clarification.

A little later, a Bithumb spokesperson said that it was after the suggestion from by regulators to first conduct a thorough investigation and release an official statement, was the announcement retracted.

On June 21st, Bithumb confirmed that it was indeed hacked and has started a recovery process.

“After the incident occurred on June 20, Bithumb quickly followed the procedure to immediately report [the] incident to KISA announcing that about 35 billion Korean Won worth amount of cryptocurrency was stolen. However, as we undergo recovery process on each cryptocurrency, the overall scale of damage is getting reduced. Hence, we expect that the overall damage will be less than the amount we initially expected,” the Bithumb team said.

The $30 million figure is a rough estimate provided by the company based on the assets which were vulnerable to the attack. After a thorough joint investigation along with The Korea Internet & Security, a sub-organization of the Ministry of Science and ICT, they were able to recover a portion of the stolen amount.

As the demand for cryptocurrency and digital currency has increased significantly, the regulators have called on the investors to use wallets like Bithumb, Korbit, UPbit to avoid security breaches. This gives the investors additional security as Bithumb as already announced that it will reimburse the entire amount the investors.

“Bithumb has been administering company’s asset and customers’ asset, and all customers cryptocurrencies, as well as KRW asset, are safely stored on a cold wallet and bank respectively. Moreover, we would like to ensure that Bithumb currently has about 500 billion KRW worth of company’s fund. The amount of damage that occurred this time will be fully covered by Bithumb’s own company fund.”

By the end of 2017, Bithumb revealed its cryptocurrency holdings to be surplus of a billion dollars and reported the yearly net profit to be around $300 million. It also said that is has a $450 million in company fund and will be able to reimburse its investors with easy after the investigation.

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