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DCE Bitfinex Freezes Operations After Bitcoin Theft

bitfinexBitfinex the Digital Currency Exchange (DCE) based in Hong Kong has put on hold all forms of trading temporarily after a security breach resulted in losses of over $70 million. The company said that it was working to restore limited functioning of the exchange.

Bitfinex is the largest exchange dealing in crypto currencies such as Bitcoin, Litecoin and Ethereum.

The exchange announced the hacking earlier this week stating that 120,000 bitcoins worth around $70 million were stolen out of customer accounts. It confirmed that only bitcoins were stolen in the heist.

The company said that it was continuing its investigations and cooperating with law enforcement on the issue. In a statement, Bitfinex said,

To accommodate the relaunch, all withdrawals, open orders, and open funding offers will be canceled. Furthermore, in order to compute losses for relevant parties, settlement of all financed positions will occur in all accounts

Zane Tackett, Bitfinex's director of community and product development reassured users that the company was only settling positions and not liquidating. The value of bitcoins against the dollar has declined by over 13 percent in the past few days, resulting in a market cap loss of $1.5 billion. The company has said that it will look at various options to handle the losses borne by the customer at a later point in the investigation. Requesting patience, Bitfinex said that it was working to pinpoint the cause of the breach and its consequences. Fred Ehrsam, co-founder of Coinbase, a cryptocurrency wallet and trading platform said that since Bitfinex was a large exchange, the breach would have significant impact on a short-term basis but added that bitcoins had so far proven to be resilient.

This theft is the second largest in the history of bitcoin with Tokyo's MtGox loss in 2014 being the biggest. MtGox lost over $350 million bitcoins ultimately forcing it to file for bankruptcy protection. In April 2016, the trading platform ShapeShift saw bitcoins estimated to be around $230,000 being stolen and in May 2016, Gatecoin suffered a loss of $2 million.

IBTimes UK

Charles Hayter, founder and chief executive of CryptoCompare, a crypto currency comparison website said that while core strength of bitcoin endures despite these incidents, potential investors would be disturbed by such breaches. He added that it was a reminder of the fragility of the nascent industry.

According to James Lynn, U.K. managing director of blockchain payment company Billon Group, the latest in the string of thefts highlighted a big concern in the industry. While banks spent billions for security, there were questions on how much a bitcoin-based exchange could spend on online security.

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