Bithumb logo by desk

Cryptocurrency exchange raided days after previous heist

Image credit: REUTERS/Kim Hong-Ji/

A cyber attack on busy South Korean cryptocurrency exchange Bithumb has resulted in estimated losses of 35bn won (£24m). It is the second major attack on a Korean cryptocurrency exchange in a fortnight.

Following the incident, Seoul-based Bithumb – which is ranked as the sixth largest cryptocurrency exchange in the world – reported its estimated losses to the Korea Internet & Security Agency, a body under the Korean Ministry of Science and IT. It suspended its operations and urged its customers not to deposit any funds in their wallets.

The platform has transferred its assets to a cold wallet: a form of offline storage such as an USB stick, which renders reserves far less vulnerable to theft. It told its customers that it would be overhauling its wallet system to protect it against future cyber attacks and that it was working with a network security specialist to implement more safety precaution.

According to Yonhap News Agency, the police have begun an investigation into the incident and have collected records from Bithumb computers to help them in their investigation.

BIthumb has estimated that the attackers made off with cryptocurrency reserves worth an estimated 35bn won (£24m). It has said that it will fully compensate customers affected by the incident out of its own reserves and that it is “reducing the amount of damage through ongoing damage recovery; future [loss estimates] are expected to be lower [than £24m]”.

This is the exchange’s third security breach in the past year; notably, following a July 2017 incident which targeted a single PC and exposed customer data, South Korean intelligence blamed the attack on its hostile neighbour, North Korea. Just last week, another South Korean exchange – Coinrail – suffered a cyber attack which removed 40bn (£27m) in cryptocurrency tokens.

To cryptocurrency sceptics, the recent heists demonstrate the risk associated with trading unregulated virtual currencies. Cryptocurrency trading is banned or restricted in several countries and the White House and IMF have suggested the possibility of regulating cryptocurrencies.

Mun Chong-hyun, chief analyst at ESTsecurity, told Reuters that: “No security measures or regulations can 100 per cent guarantee safety of virtual coins. It is held anonymously and in lightly-secured systems, which makes them an irresistible target.”

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