The company admitted the breach in a blog post published on Tuesday evening. It said the attackers had made off with 119,756 Bitcoin stolen from the accounts of its customers. The horde is worth over $65 million at current prices, although some reports have placed the value as high as $75 million.
The news has driven the price of Bitcoin down by over 20 percent. Immediately after the hack, prices fell to a low of $480. They have since recovered to around $550, down from $650 before the attack was reported. The value is still high compared with the sub-$200 record lows encountered during January, but will nonetheless worry Bitcoin investors.
BitFenix is one of the largest Bitcoin trading operations around, accounting for over 50 percent of all U.S. Bitcoin transactions. The attack will bring back memories of the 2014 hack of Mt.Gox, a $460 million theft that caused the exchange, then the largest in the world, to collapse. Mt.Gox remains the biggest Bitcoin breach in history but BitFenix has now gained a comfortable second place.
In a statement, BitFenix said it has commenced an internal investigation of the attack. It has reported the incident to the relevant authorities and pledged to “co-operate” with the operations of law enforcement. It acknowledged that some customers have had their Bitcoins stolen and said it is exploring “various options” to cover the losses.
“We are investigating the breach to determine what happened, but we know that some of our users have had their bitcoins stolen,” said BitFenix. “We are undertaking a review to determine which users have been affected by the breach. While we conduct this initial investigation and secure our environment, bitfinex.com will be taken down and the maintenance page will be left up. The theft is being reported to — and we are co-operating with — law enforcement.”
The company requested its customers wait with patience while it determines how the breach occurred. It said it is “deeply concerned” about the incident and will work to “unravel” the causes and consequences of the hack, admitting much remains unknown about the attack and its aftermath.
With Bitcoin only just recovering from the uncertainty created by the collapse of Mt.Gox, the BitFenix breach is likely to trigger a new period of market volatility. Huge hacks like these have the potential to turn would-be cryptocurrency investors away from the trade for good, a strong reminder that digital currency doesn’t have the same protections in place as real world dollars and pounds.
BitFenix remained closed for trading throughout the day and has not confirmed when it will reopen its exchange. Its website homepage has been replaced by a simple maintenance page, providing updates on the in-progress investigation into the breach. Users who have had funds stolen from their wallet will need to wait to be contacted by the company. It won’t start discussions about repayment and compensation until the full scale of the attack has been realised.
