Bithumb Suffers from Crypto Theft A 3rd Time
Popular South Korean exchange, Bithumb is making headlines again for all the wrong reasons. The exchange was South Korea's most popular cryptocurrency exchange. As per 2017, the average daily liquidity turnover was roughly $1.3 B USD.
Unfortunately for Bithumb, security has been a continuous major issue. It was initially hacked in 2017, with confidential user data of 30,000 users leaked, as well as an undisclosed amount stolen. It was hacked again in June 2018 for the equivalent of $31 M USD in XRP. In both cases, Bithumb compensated its users and promised security upgrades, while continuing its operation.
3 is the Magic Number
Yesterday it was announced via a blog post that Bithumb was hacked a 3rd time. As per the post:
"About 10:15 pm on the 29th, we detected abnormal withdrawal of the company's cryptocurrency through Bithumb's abnormal trading monitoring system.
All the spilled cryptocurrency is owned by company, and all the member's asset is under the protection of cold wallet.
According to the company's manual, Bithumb secured all the cryptocurrency from the detection time with a cold wallet and checked them by blocking deposit and withdrawal service.
As a result of the internal inspection, it is judged that the incident is an "accident involving insiders"."
In a series of tweets, it became apparent that the equivalent of $13 M of the cryptocurrency EOS and the equivalent of $6 M XRP. The funds seem to have been stolen from Bithumb's hot wallet, and not its higher security cold storage. The funds were sent to various exchanges that don't require KYC and exchanged to other currencies, to try to mask their trail. In accordance with their post, it seems to have been an inside job, possibly committed by an employee.
What Happens Now?
As in previous incidents, one may assume that Bithumb will compensate its users and shrug off the hack. There is a slim chance that Bithumb might be able to recover some of the funds.
Unlike Bitcoin and most other cryptocurrencies, EOS's Block Producers have the ability to reverse transactions and freeze accounts. Should the EOS Block Producers act, the majority of the funds could be returned easily. It is, however a matter of time. The longer they take, the less likely the funds will be returned via EOS.
Another alternative is tracking of funds and collaborating with various exchanges. This is something that could also potentially recover some of the funds or at least frustrate the hackers.
So far the markets have responded negatively to the news, with only Binance Coin in the green. EOS has dropped from $4.30 to roughly $4.10 and Ripple (XRP) faced a similar drop.
A common word of wisdom is to always store your cryptocurrencies in a wallet after trading. Remember the saying; "not your keys, not your Bitcoin". Stay safe crypto traders!
Written by Jonathan Ganor
Writer & cryptocurrency aficionado