Bitcoin tumbles as hackers steal $65 million from Hong Kong exchange

Bitcoin tumbles as hackers steal $65 million from Hong Kong exchange

The price of bitcoin has tumbled as one of the world's largest exchanges suspends trading after losing $65 million worth of the cryptocurrency in a massive security breach.

The value of bitcoin against the dollar plunged in the aftermath of the hacking attack at Hong Kong-based Bitfinex, leaving the cryptocurrency treading water at $540, way down from a $650 weekend high.

Bitfinex has replaced its home page with a security warning, informing users of its decision to halt trading while it investigates the breach. In total, the mysterious hackers made off with 119,756 bitcoin, leaving Bitfinex customers seriously out of pocket.

"We will look at various options to address customer losses later in the investigation," says the company in a statement. "While we are halting all operations at this time, we can confirm that the breach was limited to bitcoin wallets; the other digital tokens traded on Bitfinex are unaffected. We are deeply concerned about this issue and we are committing every resource to try to resolve it."

Comments: (3)

A Finextra member
A Finextra member 03 August, 2016, 14:311 like 1 like

Can a bitcoin expert please explain how these bitcoins get stolen. Wouldn't it require the hacker to take the access keys rather than the coins, and wouldn't it also require a miner to validate the transactions, so can we not point to the transactions on the blockchain and declare them as fraudulent, or is there no repudiation on the blockchain? Thanks  

Peter Fletcher-Dobson
Peter Fletcher-Dobson - Kiwibank - Wellington 04 August, 2016, 03:07Be the first to give this comment the thumbs up 0 likes

A great use case for why banks should be seizing the opportunity around being an on-off ramp for crypto currency. We're actually good at managing this stuff.

Good summary of what's currently known here:

http://www.coindesk.com/bitfinex-bitcoin-hack-know-dont-know/

Russell Bell
Russell Bell - Fastbase Ltd - Wellington 04 August, 2016, 04:062 likes 2 likes

Not an expert but for what it's worth, the hacker stole private keys and used those keys to transfer USD65m worth of bitcoin elsewhere.  These transfer transactions would have been recorded on the blockchain, yes.  There is no repudiation on the Bitcoin blockchain, unlike Ethereum.  Nobody knows yet who was at fault (likely bitfinex or bitgo or both) or whether depositors will be refunded.

Moral of the story, and this should not be news to anybody: hold your funds yourself, don't leave it with an exchange for longer than necessary.  Unfortunately the learning curve for setting up a private wallet is still rather steep.

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