Hackers steal $60m of bitcoin in a single swoop

Yet another major crime has rocked the cryptocurrency world. Photo/Getty Images.

In a single withdrawal, hackers syphoned US$40 million (NZ$60m) in bitcoin from one of the largest cryptocurrency exchanges in the world.

Binance said it would suspend all deposits and withdrawals for at least a week while it conducts a security review - a move that affects 6 million users - although trading will continue. The company said that thieves employed phishing and viruses to commandeer the 7,000 bitcoin, and that hackers might still control some user accounts.

The heist builds on the explosive growth in cryptocurrency crime and investor scams, which increased more than 400 per cent in 2018 and added up to about US$1.7 billion in losses, according to the cybersecurity firm CipherTrace. More than half that total, or US$950 million, was taken from exchanges such as Binance and wallets that allow people to store digital currencies.

Many people are drawn to bitcoin because they can make transactions anonymously. Though the trades are recorded in public transactions, individual account holders are not personally identifiable, a key reason the cryptocurrency is so appealing to criminals. Law enforcement agencies do have ways of tracking stolen bitcoin, however, including tying a person's known IP address to their bitcoin transactions and tracing how hackers exchange large amounts of bitcoin into hard currency.

Binance said the theft affected one of its Internet-connected wallets, which contained about 2 per cent of its total bitcoin holdings. The company said that no user money will be affected and that insurance will cover the losses in full.

"It was unfortunate that we were not able to block this withdrawal before it was executed," Binance said in a statement. "Once executed, the withdrawal triggered various alarms in our system. We stopped all withdrawals immediately after that."

Even cryptocurrency investors unscathed by hacks and scammers are still feeling the pain of a market that has dwindled in value. At its peak, in December 2017, bitcoin was worth nearly US$20,000, igniting a buying frenzy that helped propel the esoteric world of cryptocurrency into the mainstream. Several companies hoping to cash in on the hysteria even changed their names to include the word "blockchain" - the technology that drives the virtual currency - sparking widespread amusement and mockery.

By February 2018, bitcoin's value was cut in half. Then in December, a year after its peak, bitcoin had fallen below US$4,000, a drop of more than 80 per cent. The rest of the cryptocurrency market soon followed bitcoin's lead.

The price of bitcoin fell about 3 per cent Tuesday after Binance's announcement, but it has since recovered, according to Coinbase, a US-based cryptocurrency exchange. As of Wednesday afternoon, bitcoin was trading at US$5,901.

According to the cryptocurrency tracker CoinMarketCap, the global market capitalization for all digital currencies was US$113 billion at the end of January, down more than 86 per cent from its all-time high a year earlier.

The biggest bitcoin exchange heist occurred in 2014, when Japan-based Mt. Gox said that attackers stole nearly US$500 million worth of the digital currency. And in 2016, hackers nabbed about US$72 million in bitcoin from Hong Kong-based Bitfinex.

- Washington Post