Hackers have stolen $72 million worth of bitcoin

$72 million worth of bitcoins have been stolen from Hong Kong-based bitcoin exchange causing the price of bitcoins to drop, casting doubt on the government's decision to use blockchain technology for its Crown Commercial Service.

The heist is being described as a "21st century bank robbery."
The heist is being described as a "21st century bank robbery."

Hackers have stolen $72 million of bitcoins from the systems of Hong Kong-based bitcoin exchange Bitfinex.

Bitfinex took to its website to announce the hack but did not detail exactly how much was lost, or how the heist was carried out.

Zane Tackett, Bitfinex's community and product development director, disclosed the number of stolen bitcoins to Bitfinex customers via Reddit, claiming 119,756 bitcoins were taken – but the number could grow. He has been busy answering customer inquiries, promising updates will be posted to the social network site tomorrow.

Bitfinex's security firm Bitgo took to Twitter to announce that it has not found any evidence of a breach of its servers. The company said customer bitcoin wallets are held separately, which limited the scale of the breach.

Bitfinex halted all trading, digital token deposits and withdrawals. The exchange did not confirm if it had any plans to reimburse affected customers.

The exchange released a statement saying, “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.”

Jon Geater, chief technology officer of Thales e-Security, told SCMagazineUK.com: “We as an industry are working to develop blockchain, a key underlying technology on which bitcoin runs, in order to take advantage of the exciting opportunities it opens up for connected markets and online living. But the world has to realize that blockchain and bitcoin are not magic: they are not silver bullets to all security and state interference problems; they are only technology. There's a long way to go before we find the right balance of security and risk and speed and usability.”

And Geater added, “Remember that security problems rarely go away: they only move around. So in blockchain although some issues of transaction validation and identity are improvements on the previous art, other things get harder to underpin that. And with individual user sovereignty a central part of the bitcoin philosophy the balance of user and central control is a very tough circle to square.”

News of the hack broke at around the time Hong Kong was dealing with Typhoon Naida, a storm with winds up to 137kph that closed streets and most businesses.

News of the hack sent the value of bitcoin falling, with the Financial Times reporting that “bitcoin prices slid 20 percent from $604 to $482 late in the U.S. day, marking a two-month low. By late afternoon in Hong Kong on Wednesday they had recovered to $544.71, according to itBit, another dollar-based exchange.”

The story comes as Credits, a blockchain platform provider, has begun supplying its Blockchain-as-a-Service to the UK public sector through the Government Digital Services' Digital Marketplace.

The Crown Commercial Service (CCS) awarded a place on the G-Cloud 8 framework agreement to Credits for the supply of distributed ledger technology (DLT), enabling the Credits Blockchain platform-as-a-service to be used by organisations across the UK public sector including central and local government, the devolved administrations, health, education, emergency services, defence and not-for-profits such as housing associations and charities.

Nick Williamson, chief executive officer of Credits told SCMagazineUK.com, "Credits is pleased to have been awarded a place on the G-Cloud 8 platform. We are excited by the huge potential of Distributed Ledger Technology for many different government and public sector applications, and are looking forward to working with UK public sector organisations to improve the efficiency and effectiveness of their services for UK taxpayers."
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