Bitfinex, a popular Bitcoin exchange platform, suffered a major hack after 119,756 units of the digital currency was stolen in Hong Kong. These units were stolen from users’ accounts, and the exchange has not yet decided how to address the losses their customers have experienced.

Bitcoin depreciates in value

The amount stolen from the cybersecurity breach was approximately $72 million USD, based on a price of $650 USD per Bitcoin. News of the hack has caused the price of the digital currency to drop 20% to $540 USD per Bitcoin. The price has apparently dropped due to Bitcoin investors selling off their holdings.

Bitfinex is currently the world’s largest dollar-based exchange platform for Bitcoin.

The company hasn’t released much information regarding the loss from the hack. They have suspended operations. Bitfinex is partnered with BitGo, a security company based in Palo Alto. BitGo provides Bitfinex’s users with an extra layer of security through segregated wallets and multiple-signature security. Due to the fact that these wallets were segregated, the wallets of some users remained uncompromised. The security company has announced that there was no evidence of a security breach on BitGo’s servers.

Exchange platforms need to limit withdrawal amount of Bitcoins

The hack exposes an issue that both BitGo and Bitfinex will have to resolve, which involves the issue of putting limits to the rapid withdrawal of large amounts of Bitcoin. Bitfinex has stated that these limits had existed, and investigators were still trying to determine how these restrictions had been circumvented.

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In general, exchanges restrict the withdrawal amount of Bitcoin  order to keep potential losses at a minimum.

After the hack, some of the customers’ wallets show a loss in funds, while other users’ wallets remain intact. Bitfinex will now have to address the hack by determining whether the users whose wallets remain intact will be allowed to withdraw their funds, or to address the hack by combining the customers’ funds and issuing refunds to all users so that each user has experienced the same loss amount.

Law enforcement involved

Bitfinex has reported that it reported the hack to law enforcement. It was also cooperating with blockchain analytic companies in order to track the stolen Bitcoins. Blockchain refers to the technology that is employed in order to generate Bitcoin, a cryptocurrency that is unregulated by a central banking authority.

The Bitfinex hack is evocative of the 2014 hack of Mt Gox, when the Tokyo-based exchange filed bankruptcy after Bitcoins valued at $500 million was lost through the security breach.