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Bitfinex Hacked, $65 Million in Bitcoin Stolen

In a message to Bloomberg News, Bitfinex confirmed that hackers took 119,756 bitcoin, or about $65 million at current prices. Bitcoin’s value against the US dollar as of the time of the article, the 3rd of August, has dropped by 13%.

Bitfinex said that all trading has been halted, including withdrawals and deposits. As soon as the breach was discovered, everything was shut down. Law enforcement has been brought in, and although the exchange has confirmed that users are missing coins, we are unclear as to what the next step will be.

Although both ethereum and USD are held in Bitfinex wallets, a spokesperson says only bitcoin balances were affected by the hack.

Fred Ehrsam, co-founder of Coinbase, a cryptocurrency wallet and trading platform, wrote in an e-mail. “Yes — it is a large breach, Bitfinex is a large exchange, so it is a significant short term event, although Bitcoin has shown its resiliency to these sorts of events in the past.”

Bitfinex wrote in a blog post: “We will look at various options to address customer losses later in the investigation. We ask for the community’s patience as we unravel the causes and consequences of this breach.”

According to http://bitcoincharts.com/, the Hong Kong-based currency exchange, Bitfinex, was the largest for U.S. dollar-denominated transactions during the last month. The Chinese exchange OKCoin, however, was the largest overall with 90 percent of transactions in Yen.

CoinDesk shows that more than $1.5 billion has dropped from bitcoin’s capitalization value in a single week.

A similar hack was performed in 2014 on the Tokyo-based Mt. Gox – which was, at the time, essentially the one and only bitcoin exchange. Bitcoin prices dropped 30% during the month of the Mt. Gox hack after the company filed for bankruptcy and shut down.

Last year, Bitfinex partnered with Palo Alto-based BitGo to implement multiple-signature security in storing user deposits online which allowed faster transactions to take place.

When the partnership was announced, Bitfinex’s support page was updated with the following:

“Since we now enforce multi-institutional second factor authentication (Bitfinex will be the first factor and BitGo the second factor), attackers are required to compromise both institutions before getting funds.”

However BitGo says no breaches have been discovered on their end. Company spokesman Joe Volat said  “To date, BitGo’s investigation has found no evidence of any compromise of its servers or services. We believe that multi-sig security technology on which BitGo’s systems are based was not affected.”

If this bitcoin theft continues following in the footsteps of the Mt. Gox hack, many will go without seeing their bitcoins returned.

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