The world’s sixth largest cryptocurrency exchange by trading volume, Bithumb, was recently hacked for roughly $31.5 million. Shortly after, it moved its funds to cold storage for extra security, and it has now revealed it is set to compensate investors, while it’s working with other exchanges to recover funds.
According to a new update posted on the exchange’s website, while the firm did report a $31.5 million to the Korea Internet & Security Agency (KISA), it may be able to recover some of the lost funds.
The update reads:
We have announced about 35 billion Korean won worth of damages to KISA. BitHumb is reducing the amount of damages through ongoing disaster recovery, future figures will be lower.
The company revealed it is currently working with other cryptocurrency exchanges to both prevent future incidents, and to retrieve some of the lost funds. Notably, while the crypto exchange officially admitted it was hacked, it didn’t reveal how the breach occurred, nor what cryptocurrencies were stolen.
Bithumb further added that company and customer funds are kept separately, and that “the company believes you can use Bithumb safely.” It noted it will fully compensate investors for their losses using company funds. Per the announcement, it has about 500 billion KRW (about $450 million) in its coffers.
Investors will likely only be compensated once the company’s investigation comes to an end, and for the time being withdrawals and deposits are halted at the exchange. The hack, according to reports, was deemed “embarrassing” by the Korean Blockchain Association, a self-regulatory body.
On social media various observers, including industry veteran Charlie Shrem, noted that Bithumb covering the hack’s losses means our industry is growing, presumably because taking on the losses protects users.
Bithumb hacked for $30M but covering all losses. Our industry is getting better and stronger 🙏 https://t.co/P2HOaFYpWS
— Charlie Shrem (@CharlieShrem) June 20, 2018
Per the update, Bithumb is conducting the investigation along with the Korea Communications Commission, the National Police Agency, and KISA. As reported Bithumb was earlier this year hit with an investigation that saw various government agencies probe its operations, with the National Tax Service (NTS) concluding it was found not guilty of tax evasion.
Last year, it was revealed the cryptocurrency exchange saw its profits rise by a factor of 171. Given the lack of information available on its recent security breach, it’s unclear whether these reports motivated the hackers.