<div dir="ltr"><a href="http://www.reuters.com/article/us-bitfinex-hacked-hongkong-idUSKCN10E0KP">http://www.reuters.com/article/us-bitfinex-hacked-hongkong-idUSKCN10E0KP</a><br><div><div class="gmail_signature"><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><div><div dir="ltr"><span id="gmail-articleText"><span class="gmail-focusParagraph"><p>Nearly 120,000
units of digital currency bitcoin worth about US$72 million was stolen
from the exchange platform Bitfinex in Hong Kong, rattling the global
bitcoin community in the second-biggest security breach ever of such an
exchange.</p></span><span id="gmail-midArticle_1"></span><p>Bitfinex is the
world's largest dollar-based exchange for bitcoin, and is known in the
digital currency community for having deep liquidity in the U.S.
dollar/bitcoin currency pair.</p><p><span id="gmail-articleText"></span></p><p>Zane Tackett, Director of Community &
Product Development for Bitfinex, told Reuters on Wednesday that 119,756
bitcoin had been stolen from users' accounts and that the exchange had
not yet decided how to address customer losses.</p><span id="gmail-midArticle_7"></span><p>"The bitcoin was stolen from users' segregated wallets," he said.</p><span id="gmail-midArticle_8"></span><p>The
company said it had reported the theft to law enforcement and was
cooperating with top blockchain analytic companies to track the stolen
coins.</p><span id="gmail-midArticle_9"></span>
<span class="gmail-first-article-divide"></span><p>Last year, Bitfinex
announced a tie-up with Palo Alto-based BitGo, which uses
multiple-signature security to store user deposits online, allowing for
faster withdrawals.</p><span id="gmail-midArticle_10"></span><p>"Our investigation has found no evidence of a breach to any BitGo servers," BitGo said in a Tweet.</p><span id="gmail-midArticle_11"></span><p>"With
users' funds secured using multi-signature technology in partnership
with BitGo, a lot more is at stake for the backbone of the bitcoin
industry, with its stalwarts and prided tech under fire," said Charles
Hayter, chief executive and founder of digital currency website
CryptoCompare.</p><span id="gmail-midArticle_12"></span><p>The security breach
comes two months after Bitfinex was ordered to pay a $75,000 fine by
the U.S. Commodity and Futures Trading Commission in part for offering
illegal off-exchange financed commodity transactions in bitcoin and
other digital currencies.</p><span id="gmail-midArticle_13"></span><span id="gmail-midArticle_14"></span>
<span class="gmail-second-article-divide"></span><p>BITCOIN SLUMP</p><span id="gmail-midArticle_15"></span><p>Tuesday's
breach triggered a slump in bitcoin prices and was reminiscent of
events that led to the 2014 collapse of Tokyo-based exchange Mt Gox,
which said it had lost about $500 million worth of customers' Bitcoins
in a hacking attack.</p><span id="gmail-midArticle_0"></span><p>Bitcoin
plunged just over 23 percent on Tuesday after the news broke. On
Wednesday it was up 1 percent at $545.20 on the BitStamp platform.</p><span id="gmail-midArticle_1"></span><p>Tackett
added that the breach did not "expose any weaknesses in the security of
a blockchain", the technology that generates and processes bitcoin, a
web-based "cryptocurrency" that can move across the globe anonymously
without the need for a central authority.</p><span id="gmail-midArticle_2"></span><p>A bitcoin expert said the scandal highlighted the risks of companies using cryptography for their ledgers.</p><span id="gmail-midArticle_3"></span>
<span class="gmail-third-article-divide"></span><p>"The more you rely
on its benefits, the greater the potential for damage when keys are
stolen. We still have some way to go to create highly secure but
convenient systems," said Singapore-based Antony Lewis.</p><span id="gmail-midArticle_4"></span><p>The volume of bitcoin stolen amounts to about 0.75 percent of all bitcoin in circulation.</p><span id="gmail-midArticle_5"></span><p>It
is not yet clear whether the theft was an inside job or whether hackers
were able to gain access to the system externally. On an online forum,
Bitfinex's Tackett said he was "nearly 100 percent certain" it was no
one in the company.</p><span id="gmail-midArticle_6"></span><p>Bitfinex
suspended trading on Tuesday after it discovered the breach. It said on
its website that it was investigating and cooperating with the
authorities.</p><span id="gmail-midArticle_7"></span><p>The security breach is
the latest scandal to hit Hong Kong's bitcoin market after MyCoin
became embroiled in a scam last year that media estimated could have
duped investors of up to $387 million. The bitcoin trading company
closed after the scandal.</p><span id="gmail-midArticle_8"></span><p>The
president of the Hong Kong Bitcoin Association said the only way to
protect information is to disperse it in so many small pieces that the
reward for hacking is too small.</p><span id="gmail-midArticle_9"></span><p>"For
an attacker, the cost-benefit strategy is quite easy: How much is in
the pot and how likely is it that I'm getting the pot?" said Leonhard
Weese.</p></span></div></div></div></div></div></div></div></div></div>
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