Hacked Cryptocurrency Exchange Bithumb Reopens Deposits and Withdrawals

  • Bithumb has recently announced it's going to reopen deposits and withdrawals for 10 cryptocurrencies.
  • The exchange froze these after being hacked in June.

Hacked South Korean cryptocurrency exchange Bithumb has recently revealed that, following a security breach that led to a loss of over $30 million, it’s going to reopen deposits and withdrawals on its platform today, August 4.

The exchange’s announcement was originally made via Twitter. Through a blog post, the company detailed that only 10 cryptocurrencies – bitcoin, ethereum, Ripple’s XRP, ethereum classic, qtum, litecoin, bitcoin cash, monero, zcash and mithril – were approved for deposits and withdrawals for now.

This means that, on its platform, 25 cryptocurrencies will remain suspended because of security concerns. The company’s post reads (roughly translated):

Some cryptocurrencies with a significant price difference of about 10 percent between Bithumb market and standard market will be opted out for this customer's asset. When services return to normal, rapid changes in price are expected. Therefore resuming normal services for such cryptocurrencies will be put on hold for the time being.

Bithumb

The crypto exchange further added that its users will need to create new deposit addresses if they want to add funds to their accounts, and that uncredited deposits made while its services were suspended will be returned.

Bithumb’s Security Breach

As CryptoGlobe covered the cryptocurrency exchange was hacked in June, and lost over $30 million as hackers took 2,016 BTC, 2,219 ETH, 692 BCH, and 5.2 million XRP, along with various other cryptos.

Once the breach was discovered, Bithumb quickly froze transaction services and hastily moved all of its funds stored in hot wallets to cold storage, to prevent further damage. It then went through maintenance periods and security reviews, which affected its reputation.

Since then, the exchange revealed it managed to recover $14 million, and noted it will compensate losses through a coupon-based plan. After the breach, the Korea Blockchain Association (KBA) inspected the firm’s operations, and certified it as one of the 12 crypto exchanges that passed the check, out of 23 in South Korea.

Other exchanges that passed the check were OKEx, Huobi Korea, Korbit, and Upbit. The market particularly welcomed Bithumb’s recovery, however, as it was the country’s largest exchange by trading volume before the security breach.

As covered, the exchange has started its global expansion plan as it applied for a license with Japan’s Financial Services Agency (FCA) and with Thailand’s Securities and Exchange Commission (SEC).

Israeli Courts: Bitcoin Is a Taxable Financial Asset, Not a Currency

A central district court in Israel has reportedly ruled in favor of the nation’s tax collection department, which has categorized bitcoin (BTC) as a financial asset - but not a medium of exchange (MoE).

According to the court’s ruling, the Israeli tax department may impose and collect taxes on transactions involving bitcoin, the world’s most dominant cryptocurrency. The court’s decision on the matter was announced on Monday (May 20, 2019).

Bitcoin Is a Taxable Financial Asset

As confirmed by Israel’s central district court, bitcoin-related transactions are subject to a capital gains tax as the pseudonymous cryptocurrency is considered a financial asset by the country’s central bank.

Notably, the matter was brought before court Judge Shmuel Bornstein by the founder of a crypto startup that argued bitcoin should be treated as a currency, or medium of exchange. The entrepreneur said that transactions involving the cryptocurrency should not be taxed because it’s a currency, not a financial asset.

Bitcoin's Status Hasn't Yet Been Established

As noted by local news outlet Globes: 

The Central District Court in Lod accepted the tax authority’s interpretation, and held that bitcoin is an asset and not a currency, and that the transaction in question is therefore taxable.

Going on to mention that Israeli financial regulators have not yet established a comprehensive regulatory framework for cryptoassets, Judge Bornstein said that it was “hard to envisage a result whereby Bitcoin would be considered a currency for tax purposes in particular.”

According to Globes, the case involving bitcoin-related transactions could reach Israel’s Supreme Court.

Commenting on the status of Bitcoin, Itay Bracha, Managing Partner at Israel-based law firm Bracha & Co., remarked:

The ruling is a signal to all those who have yet to report cryptocurrency-related [capital gains] or based their actions on differing legal advice.

Building Decentralized Infrastructure for the Transportation Sector

Per the legal specialist, the recent ruling is “unequivocal” and that it is only a “judicial interpretation”, not a “new legalization.” Therefore, the current ruling on the status of bitcoin would only “apply retroactively.”

As noted by local sources, the latest BTC-related case involves Noam Copel, the founder of blockchain startup DAV. As stated on the crypto firm’s official website:

We’re building a decentralized infrastructure to revolutionize the transportation industry on the blockchain.

In 2011, Copel reportedly purchased BTC and sold it in 2013 for a profit of around $2.3 million. Arguing that his profits, or capital gains, were not taxable, the crypto entrepreneur stated (in court):

Bitcoin should be classified as a foreign currency, and that his profits should be seen as exchange rate differences received by an individual not in the course of a business, and therefore should not be taxed.

As explained, the Israeli courts ruled in favor of the nation’s central financial institution by categorizing Bitcoin as a financial asset - which is subject to taxes.