Bitfinex is a Hong Kong-based exchange Company. On Tuesday, Bitfinex was hacked in a security breach. This ended up draining almost 119,756 Bitcoins from the accounts of its customer. This sum is estimated to represent a significant proportion of the company’s asset. Days ahead of this incident, Bitcoin prices had significantly fallen. This attack made the price of Bitcoin fell further by twenty percent.
Was this the first attack?
This was the second time for Bitfinex exchange to be hacked. The last attack was confirmed in less than two years down the line where 1500 coins were drained. The company’s block chain has proven extremely robust. Forging of unauthorized balances and double spending is common. The Company has been involved in not less than 60 high-profile incidents of hacking. This was since the digital asset was created. Just like other financial institution, publicizing hacking incidents is not done. This is for reputation reasons or not to scare and lose customer. If the incidents are too obvious to conceal, they publicize.
Causes of system insecurity:
Balances of Bitcoin are only secure as the private keys. These keys control the balances of Bitcoins. Keys can be easily forgotten since they take a very complicated shape of a string. They can also be lost if not well stored. Many Bitcoin users store their keys on hard drives of easily accessible computers for conveniences purposes. Others store their keys on devices connected to the internet. However, this is risky. Theft of Bitcoin balance information and keys stored in the computer make it easy to hack. The safest way of storing Bitcoin key is cold storage. According to security experts, this is the same as holding the keys in an offline hard drive or on inscribed pieces of paper.
But who do we blame?
Following the attack, Bitfinex’s customers and community have been searching for the hackers. Bitfinex has become one of the most targeted institutions since it had two of the three private Keys. Others claim that BitGo’s model was exposed causing the weaknesses. An internal investigation stated no evidence of a server breach.
Most customers are now questioning when their funds will be accessible. Bitfinex revealed that only its bitcoin holdings were stolen. According to representative Zane Tackett, who have been responding some questions from customers via social media, indicated that more information about customer withdrawals are forthcoming. Some people claimed US Commodity Futures Trading Commission (CFTC) over alleged trading violations. To put it clear, Bitfinex settled its account worth $ 75,000 with CFTC earlier this year.