South Korean cryptocurrency exchange Bithumb has recovered half of the $31 million worth of cryptocurrency previously reported stolen.
On June 20, Bithumb announced that 35 billion Korean Won (KRW) worth of cryptocurrencies had been stolen following a major hack. However, the exchange’s recent ‘Scale of Damage Report’ now estimates that the actual damage is just half that figure, standing at 19 billion KRW.
Continuous recovery process
According to Bithumb’s latest report, they managed to limit their losses by implementing a ‘continuous recovery process’. This involved the cooperation of cryptocurrency exchanges and foundations worldwide, who participated with and supported Bithumb in their efforts to recover the stolen funds. The original estimate that $31 million worth of cryptocurrencies had been stolen has now been halved to just $17 million. As Bithumb is continuing the recovery process, the overall losses could fall further.
How did Bithumb limit their losses?
Bithumb’s official statement highlighted their ‘quick response’ as being the main reason why they were able to limit the overall damage caused by the hack. They quickly moved cryptocurrencies from a hot wallet (one that is connected to the internet) to a cold wallet (one that is not). Following the hack, Bithumb officially announced that their customers should not make any further deposits. However, their ‘Scale of Damage Report’ notes that deposit orders are still being made. Bithumb reiterated their request that customers refrain from depositing funds until further notice.
Bithumb Announces Compensation Air Drop
From June 28, all Bithumb exchange members have been able to purchase commission fee-free coupons. All members who applied for compensation for withdrawal halts will be eligible to receive the equivalent value of cryptocurrencies that they lost in the form of an air drop. However, the type of cryptocurrency used for this compensation event has not yet been decided.
Effects of Bithumb’s hack
According to industry website CoinMarketCap, the June 20 hack has had a significant effect on Bitthumb. The exchange’s 24-hour trading volume stands at just over $128 million, down significantly from $400 prior to June 20. Bithumb’s hack is believed to be one factor behind the recent fall in the price of Bitcoin and other cryptocurrencies over the past week. Prior June 20, the total market capitalization of all cryptocurrencies stood at over $290bn. Since then, over $45bn in value has been wiped off the market.
How is the industry responding to cyber security threats?
As reported by Bitcoin Exchange Guide, a self-regulatory cryptocurrency agency, CryptoUK, was formed in February of this year to help address cyber security concerns within the United Kingdom. According to CryptoUK’s chairman Iqbal Gandham, this institution stipulates that 90 percent of the funds held by exchanges are kept in cold wallets. CryptoUK is aiming to improve cyber security standards and practices within the industry and help to reduce the possibility of cyber attacks occurring such those suffered by several South Korean exchanges over the past year.
Bithumb’s ability to recover half of its stolen funds within such a short space of time indicates that the cryptocurrency industry is become more adept at cooperation. With an increased understanding among cryptocurrency users of the potential ways that exchanges can recover hacked funds, it is possible that future cyber attacks will have a less dramatic impact on the value of cryptocurrencies.