The Bithumb Hack: The Impact

This week, on Wednesday, about 35 billion won (~$31 million) worth of cryptocurrencies were stolen in a hack-attack from South Korean cryptocurrency exchange, Bithumb. Despite the fact that it has been more than 24 hours since the news broke, details are still sketchy about what happened. However, the impact of the hack is just beginning to be felt – like ripples in a pond.

Information So Far About the Hack

First of all, the exchange froze all deposits and withdrawals as soon as it found out about the hack. At this time, it is not known how many users were impacted by the hack.

While complete details of which tokens were stolen are unknown, news emerged that the Ripple coin XRP was targeted in this hack. Bithumb accounted for about 10% of XRP’s global volume of trade in the last 24 hours. The exchange has not responded to the media about this report.

Another piece of information that is known is that Bithumb had conducted a security improvement check, just a couple of days before the attack. The exchange had stated that it had noticed an increase in the number of unauthorized access attempts.

While the security upgrade was being done, the crypto exchange also started moving their customers’ digital assets into cold storage wallets so that their investments were stored in a secure, offline environment.

One more thing that is known is that about an hour before the exchange released the news of the hack on its website, Bithumb informed the Korea Internet & Security Agency (KISA) about the attack. The KISA is currently investigating the attack, however, no further details about the probe are known yet.

Bithumb immediately announced that it was going to pay each victim the total amount that they lost in the attack, as well as a sum 100,000 won (~$85), over and above that.

The Impact of the Hack

The first impact was felt by the world’s number one cryptocurrency. The price of Bitcoin dropped by $200 as soon as the news of the hack broke. However, the crypto bounced back in a couple of hours.

While the crypto exchange froze all deposits and withdrawals, trading is continuing. In fact, the volume of trade at the exchange has gone up since the hack attack took place.

This is the second cyber-attack on a cryptocurrency exchange in the last 2 weeks. The last one was an attack on a much smaller exchange called Coinrail from where $40 million worth of cryptocurrencies were stolen.

It remains to be seen whether Korean authorities will now take steps to implement strong regulatory frameworks around the cryptocurrency market the way Japan has done.