Bitcoin price tumbles after $31 million hack on Bithumb cryptocurrency exchange

Anthony Cuthbertson

The hack of a South Korean cryptocurrency exchange caused a brief crash in the price of bitcoin and other major cryptocurrencies.

The Bithumb exchange announced on Wednesday, 20 June, that hackers had seized $31 million worth of cryptocurrency from its online vaults, marking the second time in less than a year that it has been breached.

The price of bitcoin fell by around $200 in less than an hour following the news but has since recovered.

The news once again raises questions of security surrounding online cryptocurrency exchanges, with some industry figures calling for greater regulation in the space.

Kevin Curran, a professor of Cybersecurity at Ulster University, said the lack of consumer protection continues to leave investors vulnerable to such attacks.

“Unlike traditional banking mechanisms, blockchain currencies can be stolen and moved to thieves' accounts with no means of recovery. Nothing can bring it back. This is a real and ever-present danger with cryptocurrencies and there have been ever-increasing incidents of coins being stolen, as seen recently," Dr Curran told The Independent.

"Ultimately, remember that the European Banking Authority and others have warned that bitcoin users are not protected by refund rights or chargebacks. Because of this, many people believe the risks outweigh the benefits."

Bitcoin and other cryptocurrencies fell in price after news emerged of another exchange being hacked (AFP/Getty Images)

In a series of tweets, Bithumb urged customers to not deposit any funds for the foreseeable future and announced that all withdrawal services had been halted.

The exchange tweeted: "All deposit and withdrawal service will be stopped to make sure the security. We will keep notice you of the restart of the service. We apologise for your inconvenience and thanks for your understanding."

The Bithumb exchange also deleted a tweet saying that it would reimburse customers for any losses sustained as a result of the hack.

Bithumb is the second cryptocurrency exchange in South Korea – home to many of the world's largest trading centres – to be hit by hackers this month, following the successful targeting of the Coinrail exchange on 10 June.

The "cyber intrusion" caused a loss of about 30 per cent of cryptocurrencies traded on the exchange, which was equivalent to around $37 million. ​