Hackers Reportedly Pilfer $72 Million In Bitcoins From Hong Kong’s Bitfenix Exchange
Bitcoin investors, beware! $72 million USD worth of bitcoin was recently stolen from Hong Kong’s Bitfenix exchange. All trading within the company, including all digital token deposits to and withdrawals from Bitfinex, have been stopped until the culprits are caught.
Bitfenix is a trading platform for bitcoin, Litecoin and Ether that includes margin trading along with exchange and margin funding. Bitfinex is the world's largest dollar-based exchange for bitcoin and is known for having deep liquidity in the U.S. dollar/bitcoin currency pair. The Hong Kong-based company is also a popular site for margin trading, process in which traders can borrow a certain number of bitcoin and close their account with that same number plus interest.
The company quickly reported the theft to law enforcement. It does not know if the robbery was an inside job or if it was conducted by hackers. It also does not know how to compensate customer’s losses.
Last year Bitfenix collaborated with BitGo, a company which uses multiple-signature security to store user deposits online. Bitfenix was able to confirm that none of these accounts were touched. They also stated that the robbery did not "expose any weaknesses in the security of a blockchain", or the technology that generates and processes bitcoin.
The robbery resulted in other unanticipated consequences. On Tuesday the value of bitcoin dropped by 27%. It increased by 1% this morning, but it is having a hard time rebounding from the loss. The Bitfenix website is also currently down and the company claims to have been “working on getting the platform up and running on a secure instance so that users can log in and see if their accounts have been affected”.
This in only one of several scandals that have rocked Bitfenix this past year. Bitfinex was ordered to pay a $75,000 fine by the U.S. Commodity and Futures Trading Commission two months ago. It was also charged for offering illegal transactions in bitcoin and other digital currencies. Bitfenix has also been accused by many users of manipulating prices.