As reported by Altcoin Buzz this morning, South Korean cryptocurrency exchange Bithumb has suspended deposits and withdrawals after losing $30 million worth of cryptocurrencies as the result of an apparent hack. The THIRD hack for Bithumb in 12 months and yet another setback for the cryptocurrency space.
Bithumb currently ranks as the world’s sixth-largest and South Korea’s second-largest cryptocurrency exchange, with a daily trading volume of just over $330 million, according to CoinMarketCap. Alongside UPbit, Coinone, and Korbit, Bithumb is (was) one of the most trusted digital asset trading platforms in South Korea.
The hack took place on Monday after which Bithumb transferred the remaining coins to safe parts of the exchange. The company made the news regarding the hack public themselves and claims to fully reimburse the costs.
Bithumb stated on Twitter:
“We checked that some of cryptocurrencies valued about $30,000,000 was stolen. Those stolen cryptocurrencies will be covered from Bithumb and all of assets are being transferring to cold wallet.”
Hacks standing in the way of mass adoption
Although it is great that Bithumb promises to reimburse the cost, the damage is far greater than the $30 million that was stolen. The price of Bitcoin dropped nearly $200 in the hour following the hack, the overall market lost 9 billion. Because of this, the Bithumb hack erased much of the recovery that the markets had seen over the previous 48 hours. And not only the recovery, also the bullish feeling. Luckily, the market has been picking itself back up over the last 6 hours. Nevertheless, the bullish feeling of the last 2 days has been damaged.
It hasn’t been the first hack of a crypto exchange in 2018. In January, 500 million dollars were stolen from the Japanese Coincheck and last week the South Korean Coinrail reported that $40 million in altcoins had fallen into the hands of hackers. After the Coinrail hack Bitcoin plunged down and saw a new low since February.
Today, similar to the Coinrail hack, the problems with Bithumb have dominated the mainstream media. All big news websites around the world reported the Bithumb hack, getting again a chance to “show” the world that cryptocurrencies are a big risk and not safe. Saddened, because, during times that a new hype is needed to push Bitcoin to a new high, retail investors need to get motivated to get into the market. Therefore, weekly news about hacks is not helping!
Suspicion of coordinated hacks
The hacks fuel the suspicion within the market that the hacks are coordinated and designed to damage the price of Bitcoin, but also to damage the reputation of the current crypto exchanges. One of the reasons for this is that the hacks every time happen when the market is going up. The hacks also come at a time that big banks and investment firms are starting to show interest in cryptocurrencies.
It is not strange to think that parties such as Goldman Sachs and NASDAQ currently benefit the most from the hacks. When cryptocurrencies are really starting to break through and are ready for mass adoption, chances are that new investors would rather store their cryptocurrencies at a Goldman Sachs or Bloomberg than at a crypto exchange that has been hacked in the past. Especially, if parties like Goldman Sachs and Bloomberg will refer to the Bithumb hacks when marketing their own platforms.
Ironically, the government of South Korea today announced that it will regulate cryptocurrency exchanges like banks, with stricter regulations. The recent Bithumb hack will fasten the process of implementing the country’s first cryptocurrency regulatory framework.