The Bitfinex cryptocurrency exchange in Hong Kong has suffered one of the largest Bitcoin thefts in history, with hackers stealing 119,756 BTC, valued at approximately $72 million at the time. The breach, reported on August 3, 2016, is the second-largest security breach of a Bitcoin exchange, trailing only the infamous Mt. Gox hack of 2014.
How the Attack Unfolded
- The stolen Bitcoin was taken from users’ segregated wallets, raising concerns about the exchange’s security measures.
- Bitfinex suspended trading immediately after discovering the breach and has been working with law enforcementto investigate the attack.
- The exchange has not yet determined how to compensate affected customers.
Bitcoin Market Reacts to the Hack
Following the news, Bitcoin prices plummeted over 23%, reflecting the market’s immediate fear. While some recovery was observed the next day, the hack dealt a severe blow to trust in centralized exchanges.
Comparison to the Mt. Gox Hack
The attack on Bitfinex is reminiscent of the Mt. Gox disaster, where an estimated $650 million in Bitcoin was stolen, leading to the exchange’s bankruptcy. While Bitfinex claims the breach did not compromise the blockchain itself, the incident raises major concerns about centralized exchanges’ security.
What’s Next for Bitfinex?
Bitfinex has announced that it will:
- Conduct an internal review to assess the extent of losses.
- Work with authorities to track down the stolen Bitcoin.
- Settle open margin positions at current market prices.
This incident underscores the inherent risks of centralized exchanges, pushing the cryptocurrency industry to reevaluate security measures and consider decentralized alternatives.
