Bitcoin plunges 10% after $65m hack

Exchanges halt trading as security breach causes rapid sell-off of the cryptocurrency

Yuji Nakamura,Lulu Yilun Chen
Wednesday 03 August 2016 15:14
Comments
Police are currently investigating the theft of bitcoin woth millions of pounds
Police are currently investigating the theft of bitcoin woth millions of pounds

Bitcoin plunged more than 10 per cent after one of the largest exchanges halted trading because hackers stole about $65m (£49m) of the digital currency.

Bitcoin slumped 5.5 per cent against the dollar at 2:30pm on Wednesday in Tokyo, bringing its two-day drop to 13 per cent. Prices also sank 6.2 per cent on Monday, although it was not clear if that initial move was related to the hack.

Hong Kong-based exchange Bitfinex said on Tuesday it halted trading, withdrawals and deposits after discovering the security breach. The exchange said it was still investigating details and cooperating with law enforcement, but acknowledged some bitcoins were stolen from its users.

“Yes, it is a large breach,” Fred Ehrsam, co-founder of Coinbase, a cryptocurrency wallet and trading platform, wrote in an email. “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 confirmed in a message on Wednesday that the hackers had taken 119,756 bitcoin, or about $65m at current prices. While trading was halted in all digital currencies, including ethereum, the exchange said losses were limited only to bitcoin. It also said US dollar deposits were not affected.

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

The Hong Kong exchange was the largest for US dollar-denominated transactions over the past month, according to bitcoincharts.com.

Chinese exchange OKCoin was the largest overall bourse for trading in the digital currency, more than 90 per cent of which is denominated in the Chinese yuan.

More than $1.5bn has been wiped from bitcoin’s market capitalisation this week, according to research from CoinDesk.

© Bloomberg

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