Bithumb Hacked In Apparent Inside Job

In yet another blow to the cryptocurrency community, Bithumb, South Korea’s largest digital currency exchange, was hacked on Friday, March 29, and it looks as though the culprits may be among the exchange’s own employees.

According to an announcement from Bithumb, the exchange’s security system noticed “abnormal withdrawals” taking place at approximately 10:15 p.m. KST on March 29. Bithumb claims all the stolen crypto was owned by the company and that its customers’ assets, stored in Bithumb’s cold wallet, remain unaffected. However, the exchange has halted all withdrawals and deposits until the source of the hack is found.

Per Bithumb’s announcement, an internal investigation revealed that the hack is most likely the work of “insiders.” Bithumb is working with the Korean Internet and Security Agency (KISA), the Cyber Police Agency, and other security companies to track down the perpetrators and fix the breach that allowed the exchange to be hacked in the first place.

Bithumb apologized to its customers and even admitted that the hack was partially its fault:

“We constantly monitor and block external hacking. However, it was our fault that we only focused on defense of outside attack and lack of verification of internal staff. We will do our best to resume deposit and withdrawal as soon as possible to secure the service’s stability.”

Although Bithumb did not disclose the amount of crypto stolen in the attack, Dovey Wan, respected crypto insider and founder of virtual currency investment fund Primitive Ventures, tweeted on March 29 that Bithumb was being hacked “at its EOS cold storage level” and that over 3 million EOS coins had been transferred out of the exchange. Although her claim that the hack was happening at the cold storage level was incorrect, reports confirm her assertion that 3 million EOS, worth approximately $13 million, were moved from the exchange’s hot wallet to various exchanges.

A few hours later, Wan tweeted that Bithumb’s XRP wallet had also been hacked and 20 million XRP tokens, worth approximately $6 million, had been stolen. A tweet by XRP Scan confirmed Wan’s assertion that the XRP wallet had been hacked, showing that “pages and pages” of transactions of 90,000 XRP went out from Bithumb’s hot wallet in the last few days.

This is not the first time Bithumb has received bad press. In December 2017, the Korea Communications Commission imposed a fine of 60 million won (approximately $54,600) on Bithumb for failing to implement sufficient protocols to protect customer data. In December 2018, Bithumb was accused of fabricating its trading volume to attract investors and move up in the crypto rankings. In June 2018, the exchange was hacked, and about $31 million in crypto was stolen.

Nathan Graham is a full-time staff writer for ETHNews. He lives in Sparks, Nevada, with his wife, Beth, and dog, Kyia. Nathan has a passion for new technology, grant writing, and short stories. He spends his time rafting the American River, playing video games, and writing.

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