CoinCorner's Views on the News tries to debunk many misleading news stories, along with giving an industry insiders view on the hottest topics and stories from around the bitcoin world.

Bitfinex Offline as Customer Bitcoin Reported Stolen

bitfinex_hack


Overview

On Wednesday (2nd August) Bitfinex, one of the biggest bitcoin exchanges in the world, announced that 119,756 BTC (roughly $66 million) had been stolen from their exchange – the largest loss of bitcoins by an exchange since the 2014 Mt. Gox theft that saw 744,408 bitcoins stolen.

Source: CoinDesk


How does it affect the (bitcoin) industry?

Where do I begin? As one of the biggest bitcoin exchanges in the world, it’s likely that everyone will have felt the effects of the Bitfinex theft, whether that be directly and indirectly.

Bitfinex Customers

Obviously, those who have been hit the hardest are the direct customers of Bitfinex. Although the full extent of customer losses on an individual basis is unclear, initial reports indicate that a significant number of customers were affected as Bitfinex had a lot of customers, many with a lot of bitcoins. One unlucky customer reportedly lost his entire life savings in the hack.

My entire life savings for last 12 years are/were in btc balance on bitfinex…. Looks like I could be financially ruined.

With the future of Bitfinex unclear, many customers are desperately seeking answers.

Were BitGo or any BitGo staff hacked in this incident?

Why did BitGo’s fraud filters allow these transactions?

Why did Bitfinex’s limits not apply?

Was authy also hacked or did BitGo’s 2FA not work?

Was BitGo aware that Bitfinex was insecure?

Did BitGo advise any changes?

Why did BitGo not complain when Bitfinex claimed losses due to hacking were impossible?

The Bitcoin Price

The whole industry was also indirectly affected when the price of bitcoin plummeted after the news broke.

btcprice_bitfinex

The price fell sharply around the time of the announcement from just over $600 to under $520, but has since recovered slightly.

Mt Gox 2.0?

This theft is the largest loss of bitcoins by an exchange since Mt. Gox lost 744,408 BTC in early 2014 (worth $350m at the time), a breach that caused it to cease operations and and file for bankruptcy. The Mt. Gox scandal had both a long-lasting and damaging effect on the bitcoin industry following heavy media coverage, much of which painted bitcoin in a negative light. While it’s taken time to repair the damage, the bitcoin industry has rebounded and is now bigger and stronger than ever. We can only hope that the industry can recover quickly, if not instantly, following this attack.


How does it affect CoinCorner?

It’s always difficult to witness something like this happen to another businesses in the industry, in particular those who have played a big part in helping it grow and become what it is today. If the theft is the work of an external hacking group, then we offer our sincerest condolences to Bitfinex and hope that they can recover from this.

With any news like this, there is always somewhat of a ripple effect that follows and we have certainly felt the secondary effects. Public perception changes overnight and suddenly every bitcoin exchange becomes unsafe and untrustworthy: “Do not trust (centralised) exchanges!” “Do not keep any of your coins on an exchange!” (We agree with this – we always recommend that our customers keep their coins in a decentralised wallet).

We understand that these high profile attacks do cause panic, uncertainty and raise questions regarding the legitimacy of certain bitcoin businesses, and for other exchanges operating within the industry, these thefts can be just as damaging indirectly (through reputation) as they are directly to the company that got hacked.

Whoever is responsible and whatever the reason behind the Bitfinex hack, it is important to remember that these events do not reflect the entire industry. It really is unfortunate for Bitfinex and their customers to have to experience this, however there are many other genuine, trustworthy people and companies involved in bitcoin who will continue to work towards building the future of bitcoin.

Disclaimer: The views and opinions expressed here represent those of the contributor, not necessarily those of CoinCorner.


Have you been affected by the Bitfinex theft? Let us know your thoughts in the comments below…

Categories:

Miscellaneous, Molly, News, Opinion, Views On The News

Show Buttons
Share On Facebook
Share On Twitter
Share On Google Plus
Share On Linkdin
Share On Pinterest
Share On Reddit
Share On Stumbleupon
Hide Buttons