120,000 bitcoins stolen from Hong Kong exchange, price drops 20pc

3 Aug 201656 Shares

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Bitcoin as a currency is in turmoil, after one of the world’s largest bitcoin exchanges in Hong Kong suffered a security breach resulting in a heist of 120,000 bitcoins, dropping its price by 20pc overnight.

The Hong Kong bitcoin exchange, Bitfinex, became aware of a security breach on 2 August on its systems, resulting in the decision to cease trading and shut down its website temporarily.

Based on the exchange’s statement, this latest breach appears to have only affected bitcoin wallets with Bitfinex, with it stating that other digital tokens have been unaffected.

Confirming that it is now dealing with law enforcement to help find the culprit behind the hack, it revealed on Reddit the full extent of the damage.

Based on its estimates, just under 120,000 bitcoins were stolen during the raid, which, at current rates, equates to a monetary value of €57m.

To get a sense of how large an exchange this was, data on transactions using the exchange during the 30 days prior to the heist revealed that 600,000 bitcoins were traded.

This amounts to just under 2pc of all of the 39m bitcoins transacted during the same period.

Bitcoin price drops 20pc

This current price of bitcoin is in the midst of a major flux as, according to CoinDesk, the price of bitcoin dropped by 20pc compared with the price on Saturday (30 July), and is now sitting at just under $500 per bitcoin.

However, according to market analysts, this market value is not solely the result of this heist, with additional blame being placed on what was referred to as ‘the halvening’ by bitcoin traders.

On 9 July, the rewards for bitcoin mining was universally dropped by 50pc, which surprisingly resulted in little change in bitcoin price, but traders could now be seeing the effects of such a move.

Analyst Tuur Demeester said to CoinDesk: “It looks like traders got a bit ahead of themselves thinking that the price would go in a straight line after the halving. The halving is real, and will have real effects.”

Meanwhile, as Bitfinex and law enforcement try to figure out who was behind the heist, this number of stolen bitcoin ranks it as one of the largest single raids in history.

The largest raid to date occurred in 2014 when MtGox in Japan was shut down following the loss of 750,000 bitcoins worth €273m at that time.

If such a heist were to happen today, it would see €360m worth of cryptocurrency stolen.

Update:

This article has been amended to reflect it is the bitcoin price that has been affected, not its value.

Bitcoin on laptop image via Shutterstock

Colm Gorey is a journalist with Siliconrepublic.com

editorial@siliconrepublic.com