Bitcoin Confidence Takes A Hit As Heist Nets Criminals £54m

cyber crime

Digital currency rocked by another Bitcoin theft, but Bitfinex cannot confirm whether it was insider job or hack

Investor confidence in bitcoins has been shaken after thieves were able to steal nearly 120,000 units worth $72 million (£54m).

The bitcoins were stolen from the  exchange platform Bitfinex in Hong Kong, which is the world’s largest dollar-based exchange for bitcoin.

Bitfinex is known in the digital currency community for having deep liquidity in the US dollar/bitcoin currency pair, according to Reuters. It suspended trading on Tuesday after the discovery of the theft.

Bitcoin theft

bitcoinsBitfinex’s Director of Community & Product Development Zane Tackett, told the news agency that 119,756 bitcoin had been stolen from users’ accounts. Tackett admitted that the exchange had not yet decided how to address customer losses.

“The bitcoin was stolen from users’ segregated wallets,” he is quoted as saying. The theft has been reported to law enforcement and the exchange is said to be co-operating with top blockchain analytic companies to track the stolen coins.

Tackett said that the theft did not “expose any weaknesses in the security of a blockchain”. It should be remembered that Blockchain is a digital technology for recording and verifying transactions. It is mostly associated as a global online ledger that underpins bitcoin.

The theft triggered a slump in bitcoin prices, which fell over 23 percent on Tuesday after news of the theft emerged. Prices recovered slightly on Wednesday.

But to make matters worst, it seems that Bitfinex is unsure whether the theft was a result of an inside job, or whether hackers were able to breach a system.

Reuters quoted Bitfinex’s Tackett as saying on an online forum that he was “nearly 100 percent certain” it was no one in the company.

Bitcoin Crimes

Bitcoin has been rocked in recent years by a number of high profile breaches. Perhaps the most famous was the bitcoin exchange Mt. Gox, which collapsed and entered bankruptcy protection in February 2014.

That Tokyo-based bitcoin exchange filed for bankruptcy after admitting it had lost 850,000 bitcoins, worth $500m (£226m). It had been targeted repeatedly by hackers, but experts concluded later it was an inside job.

Mt Gox was once the world’s most popular venue for trading and storing bitcoins, and the collapse left thousands of creditors out of pocket.

The Bank of England has previously warned that Bitcoins could pose a threat to financial stability in the UK should it see widespread adoption.

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