$32 000 000 USD

JUNE 2018

SOUTH KOREA

BITHUMB

DESCRIPTION OF EVENTS

“On June 19, Bithumb, South Korea’s number one crypto exchange, was hacked. The attackers stole cryptocurrencies worth $30 million, making it one of the largest heists of the year so far. While the exchange has already promised to compensate its users, the damage has been done: yet again, it has become evident that even the biggest players cannot guarantee total safety. “ “The successful hack of Bithumb occurred shortly after the exchange updated its security systems following an earlier hack in 2017.” “Although a change in the wallet system may be a security improvement for some exchanges, it ended up backfiring, resulting in an unexpected cryptocurrency hack.” “Bithumb stated that their wallet system was undergoing “a total change” in order to prevent further attacks and claimed that there will be “no damage” to its customers as a consequence of the theft.” “The investigation of the event was held by South Korea’s National Police Agency and its cybersecurity division. However, at the moment of writing, no definite suspects were found.”

Hot wallets are not secure. All it takes is one exploit in the “security systems” to enable a hacker to steal funds. We are only as secure as the weakest link, no matter how large the exchange or how large the team. In fact, a larger team means higher probability that one person will mess up, which is all it takes - one person messes up and someone else doesn’t notice. Therefore, an exchange cannot depend on hot wallets staying secure, and the reason that customers didn’t lose their funds in this case was because the exchange covered it from cold wallet balances and past revenues.

South Korean Government Under Fire As 3 More Crypto Platforms Hacked - The Coin Republic: Cryptocurrency , Bitcoin, Ethereum & Blockchain News (Jan 31)
Infographic: An Overview of Compromised Bitcoin Exchange Events (Jan 30)
Q3 2018 Cryptocurrency Anti-Money Laundering Report - CipherTrace (Feb 15)
Q1 2019 Cryptocurrency Anti-Money Laundering Report - CipherTrace (Feb 20)
From Coincheck to Bithumb: 2018’s Largest Security Breaches So Far (Feb 23)
World’s Sixth Largest Crypto Exchange Bithumb Hacked, Loses $30 Mln  (Feb 23)
Korean crypto exchange Bithumb says it lost over $30M following a hack – TechCrunch (Feb 23)
South Korean cryptocurrency exchange Bithumb says it was hacked and $30 million in coins was stolen (Feb 23)
Bithumb: Hackers 'rob crypto-exchange of $32m' - BBC News (Feb 23)
Breaking News: Bithumb Hacked For $30 Million In Cryptocurrencies, Market Drops | NewsBTC (Feb 23)
Total of 7 Crypto Exchanges and 158 Wallets Hacked in South Korea, Police Find | Security Bitcoin News (Feb 26)
The Biggest Cryptocurrency Hacks of 2018 (A Year in Which $1 Billion Crypto Was Stolen) (Feb 26)
A Look Back on Some of the Most Devastating Crypto Hacks | Fintech Singapore (Feb 27)
Crypto Exchange Hacks in Review: Proactive Steps and Expert Advice (Mar 2)
SlowMist Hacked - SlowMist Zone (Jun 26)
Korean Self-regulatory Crypto Industry Body Under Question After 12 Crypto Exchanges Approved | YOUniversityTV (May 8)
Timeline of Cyber Incidents Involving Financial Institutions - Carnegie Endowment for International Peace (Dec 12)

Sources And Further Reading

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