$32 000 000 USD

JUNE 2018




“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.

Sources And Further Reading

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