Yet another massive hack at an exchange has knocked back confidence in the cryptocurrency market.
South Korean exchange Bithumb has reported losing digital currency worth more than $30 million overnight.
The exchange has suspended trading but has failed to give any details of the incident, other than customers are assured that the exchange will cover any losses.
The prices of Bitcoin, Ethereum, Ripple and other digital currencies all dropped on the news.
Bithumb suffered another hack less than 12 months ago when a worker’s computer was hacked, exposing customer data to crooks who exploited the information for cash.
Database upgrade
South Korea’s official security agency accused North Korea of breaching the exchange servers after tracking stolen data online.
“All deposit and withdrawal services will be stopped to make sure of our security. We are providing compensation. Bithumb urgently asks our valuable customers not to deposit any funds into Bithumb wallet addresses for the time being,” said an online statement from the exchange.
A few days ago, Bithumb carried out a database upgrade and told customers that digital currencies in their accounts were in cold storage – an industry term for holding accounts on a computer that is not connected to the internet.
Police in South Korea have launched an investigation into the hack.
Only a week ago, another South Korean cryptocurrency exchange suffered an online heist, losing almost $30 million of customer deposits.
The CoinRail infiltration triggered a 11% plunge in the price of Bitcoin, which is already trading at 65% below December’s peak of nearly $20,000.
Exchanges are crypto weak point
Cryptocurrency investors and regulators see exchanges as the weak point in the cryptocurrency network.
The role of exchanges is to hold digital coins and to exchange them into money, like US dollars, Japanese yen or Euros.
But the rules controlling how exchanges operate vary between countries and many governments have no regulations laying down exchange controls.
Drops in cryptocurrency prices after hacks are cited as a lack of confidence by investors in cryptocurrency security.
The price of Bitcoin dropped from $6,633 to $6,618 when the Bithumb hack was reported to the authorities, but rallied to $6,624 shortly after.
Other major cryptocurrencies, such as Ethereum and Ripple, followed the Bitcoin dip and rally.