Feeling the Bite at Bithumb

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On 20th June, 2018, around 35 billion Korean won (around $31 million) in cryptocurrency was stolen by hackers from the South Korea-based exchange Bithumb. It isn’t the largest exchange hack to date, but the fact that Bithumb is ranked as the sixth biggest crypto trading platform globally makes it a worrying event.

More details have now emerged about what happened, although the picture isn’t entirely clear yet. One piece of information suggests that XRP has been compromised and that it may have been a primary target of the hackers. According to data from CoinmarketCap, Bithumb accounted for 10 percent of the global trading volume of XRP over the last 24 hours, with a total of $32 million-worth changing hands.

Prior to the event, it also seems that there were concerns about the security issues over the past few days. Bithumb had conducted a security check on June 16th saying, “Recently the number of unauthorized access attempts has increased. As such, an urgent server checkup was conducted to strengthen the security of all system.”

Bithumb also started moving users’ assets to a cold wallet, which is a more secure offline environment.

Although Bithumb appears to have fulfilled the 5.5.7 requirements, a Yonhap report said the fact that it has 300 employees means it may not be able to cope with the increasing amount of trading volume and user numbers on its platform. The 5.5.7 requirements ask that “at least five percent of a financial institution’s staff should be IT specialists. Among those, five percent should focus on information security, while at least seven percent of the firm’s total budget should be on information security.”

Bithumb confirmed it will pay back victims using its own reserves, however the hack is probably behind the $200 dip in bitcoin’s value today. How the South Korean government wilI react also remains to be seen, although it didn’t introduce more regulations after previous exchange hacks in its jurisdiction, but that might change now.

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