30$ Million in Cryptocurrency was Stolen from the Sixth-Largest Crypto-Exchange Bithumb

Big news in the Crypto-World broke yesterday: Bithumb, the sixth largest crypto-exchange, was hacked and a little over 30$ million was stolen. At this early stage, it appears that the hackers targeted specifically the third most popular cryptocurrency, Ripple (XRP)trade.

As cryptocurrencies are still under a lot of public scrutiny and trust in such digital coins is still wavering, any sort of attack in the crypto-world that exposes local or systematic vulnerabilities can shake crypto-investors’ confidence, and prompt a turmoil in the market. And indeed, this attack did have an impact – even if just temporary – as the price of the largest cryptocurrency, Bitcoin, dropped by more than 2% following the news becoming public (BTC price has recovered since then).

It’s still unclear which accounts exactly were targeted and how will Bithumb compensate those affected clients. Almost immediately after the news broke, Bithumb announced that it would refund the lost funds out of its own pocket, but since then the tweet was deleted.

We here at AllStocks have a special interest in these sorts of tidings as we develop a Blockchain-based exchange platform which will enable the trading of cryptocurrencies next to conventional financial assets. Even though the investigation is yet ongoing and will probably take a while until final conclusions could be drawn, there are already a couple lessons here from which we can learn.

It seems that a lot of this current crisis could have been avoided or at least significantly reduced if there had been a wider use of cold wallets – wallets that aren’t connected to the internet and therefore cannot be hacked online. Of course, it’s not viable to transfer all assets to cold wallets (because trading would just not be possible), but a certain percentage of all funds should certainly be always kept “under the mattress.”

Another issue that was reported (in Korean) and may have contributed to the attack is malicious emails that were sent to Bithumb’s clients who might have not resisted the temptation and opened the emails, and thus essentially granting the hackers access into the system. It may sound banal to most users, but apparently there’s a need for another small reminder: don’t open any files or links from unknown and dubious sources, no matter how inviting and enticing their offer might be.

We will keep following the details of this attack as they unfold, and will post pertinent updates about it. Stay tuned!

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