Crypto Exchange Bithumb Undergoes Recovery Process To Reduce Losses From Recent Hack

Announcements, News | June 22, 2018 By:

South Korean cryptocurrency exchange Bithumb has announced that it may be able to reduce the amount of losses from a multi-million dollar hack earlier this week through its ongoing disaster recovery.

In an update on its website, the exchange said that while it has reported losses equivalent to $31 million to the Korea Internet & Security Agency (KISA), the total losses from the hack could ultimately decrease.

“After the incident occurred on June 20, Bithumb quickly followed the procedure to immediately report [the] incident to KISA announcing that about 35 billion Korean Won worth amount of cryptocurrency was stolen,” Bithumb said. “However, as we undergo recovery process on each cryptocurrency, the overall scale of damage is getting reduced. Hence, we expect that the overall damage will be less than the amount we initially expected.”

Bithumb reiterated that lost funds from affected users would be reimbursed using some of its $450 million in company funds. The company added that it plans to release its fiscal report for the first half of 2018 by early July.

“Bithumb has been administering company’s asset and customers’ asset, and all customers cryptocurrencies, as well as KRW asset, are safely stored on cold wallet and bank respectively,” the company said. “Moreover, we would like to ensure that Bithumb currently has about 500 billion KRW worth of company’s fund. The amount of damage that occurred this time will be fully covered by Bithumb’s own company fund.”

Bithumb also said that it will soon announce a specific schedule to resume deposit and withdrawal services, and is in the process of improving its wallet system and ensuring the protection of customer assets.

The Bithumb  hack is the second hacking incident in South Korea this year. Earlier this month, Coinrail lost around $40 million to hackers.

Yo Kwon, CEO of Blockchain Security firm Hosho, said that these hacks are becoming more frequent as the incentives for hackers remain enticing.

“Companies need to make a dedicated and continuous effort, through penetration testing and smart contract auditing, for example, to provide the security necessary to protect the assets of their investors and users,” Kwon said.

In January of this year, South Korean regulators started clamping down on anonymous trading in local crypto exchanges in a bid to reduce cryptocurrencies from being used to launder money and other crimes. Recently, the government of South Korea announced that it will regulate crypto exchanges like banks, with stricter regulations.

Elland Glover, CEO and Cofounder of stablecoin Kowala, said that the Bithumb hack serves as yet another reminder that implementing crypto industry-friendly regulatory frameworks are of critical importance to the prolonged success of the industry.

“Without them in place, there is no way to ensure that security measures throughout the crypto landscape are held to a uniform standard,” said Glover. “Once regulators define the rules of the road and security protocols for digital asset exchanges, these exchanges will mature and strengthen in turn.”