The price of bitcoin has dropped dramatically after hackers managed to steal more than $65 million-worth of the digital currency from a Hong Kong exchange.
BitFinex, one of the largest bitcoin exchanges, halted all trading on Tuesday evening and alerted its users to a security breach.
“We are investigating the breach to determine what happened, but we know that some of our users have had their bitcoins stolen. We are undertaking a review to determine which users have been affected by the breach,” the company said in a blog post. “The theft is being reported to — and we are co-operating with — law enforcement.”
The company has confirmed that 119,756 bitcoin were stolen — $65 million at current prices.
It’s not yet clear what the nature of the security breach is, or who is responsible for the attack.
The price of bitcoin dropped on the news by as much as 20% compared to its 24-hour high, CoinDesk reported — as low as $480, down from $607.
It’s a huge hack — the second-largest ever successful confirmed attack on a bitcoin exchange. Back in 2014, MtGox, then the largest exchange, collapsed after $460 million in bitcoin was stolen by apparent hackers.
Ethereum — an alternative digital currency — has recently been rocked by an attack on the DAO, a decentralised organisation that ran on its blockchain. The attacker managed to obtain $50 million-worth of Ether, but the community effectively split the currency in a “hard fork” to prevent them from being able to use it.
The attack of BitFinex will worry bitcoin users because it’s one of the biggest exchanges out there: It dominates bitcoin-USD trading, making up 50% of total volume. It also disrupts what has been a bullish year for the currency thus far. As recently as January 2016, bitcoin was trading at just over $200 — less than a third of its $740-odd June 2016 highs.
“With [BitFinex] users funds secured using multisignature technology in partnership with BitGo – a lot more is at stake for the backbone of the Bitcoin industry with its stalwarts and prided tech under fire,” CryptoCompare CEO Charles Hayter said. “With uncertainty comes volatility – with the block reward halving out of the way there is no clear path for bitcoin especially with divisions reappearing on the scaling debate. This BitFinex hack muddies the waters again for Bitcoin and opens up raw wounds in echoes of Mt Gox. “
Bitcoin is trying to shed the reputation for danger and volatility that incidents like MtGox helped create — and BitFinex’s hack could be a significant setback.
Here’s the full blog post from Bitfinex:
Today we discovered a security breach that requires us to halt all trading on Bitfinex, as well as halt all digital token deposits to and withdrawals from Bitfinex.
We are investigating the breach to determine what happened, but we know that some of our users have had their bitcoins stolen. We are undertaking a review to determine which users have been affected by the breach. While we conduct this initial investigation and secure our environment, bitfinex.com will be taken down and the maintenance page will be left up.
The theft is being reported to — and we are co-operating with — law enforcement.
As we account for individualized customer losses, we may need to settle open margin positions, associated financing, and/or collateral affected by the breach. Any settlements will be at the current market prices as of 18:00 UTC. We are taking this necessary accounting step to normalize account balances with the objective of resuming operations. We will look at various options to address customer losses later in the investigation. 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 will post updates as and when appropriate on our status page (Bitfinex.statuspage.io) and on the maintenance page. We are deeply concerned about this issue and we are committing every resource to try to resolve it. We ask for the community’s patience as we unravel the causes and consequences of this breach.