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S Korean Crypto Community Must ‘Get House in Order’ after Bithumb Hack

Bithumb

Exchange Hack

South Korea

Author

Tim Alper

Author

Tim Alper

About Author

Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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Last updated:

June 26, 2023

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South Korea’s cryptocurrency sector is livid after its biggest exchange suffered an EOS hack worth an estimated USD 13 million.

Bithumb has suggested that the hack may have been an inside job, with suspicion falling on employees who have recently been made redundant.

An employee at a major South Korean exchange told Cryptonews.com, on condition of anonymity, “This hack – or whatever it was – is a huge own goal for the industry. Exchanges have been making a concerted effort to convince the government to take us seriously. But, honestly, who is going to take us seriously if we can’t even keep our own house in order?”

Speaking to Cryptonews.com, blockchain consultant Mira Kim opined, “This case is potentially quite damaging for exchanges. There has been a lot of talk of industry-wide layoffs due to the shrinking market, but nobody could have predicted they might have resulted in something like this happening.”

Moreover, it’s not the first time Bithumb is hacked. In June 2018, about KRW 35 billion (USD 31.5 million) in cryptocurrencies were stolen from the exchange.

This time, the company was quick to point out that stolen funds, which appear to have been drained from accounts on Friday night, belonged to the company, and has since stated that all customer funds were safely stored in cold wallets, However, it has suspended customer withdrawals and deposits following the EOS raid while it conducts “temporary checks” on its platform.

Bithumb has been downsizing its domestic staff in recent weeks, with tens of employees accepting voluntary redundancy packages. The exchange has suggested that one or more former employees may have stolen private keys, which they later used to access the EOS funds.

Kyunghyang Shinmun quoted a Bithumb spokesperson as saying, “Disgruntled employees dissatisfied with the company over voluntary retirement-related issues […] have been identified as [the perpetrators].”

Last month, eToday reported that Bithumb was looking to cut its 310-employee workforce down by 50% through several rounds of voluntary redundancies. The company let 30 staff members go in December last year, and closed down its Gwanghwamun Customer Center in downtown Seoul.

The internet has been also abuzz with theories about the hack, with many South Korean commenters on news stories pointing the finger at North Korea. Pyongyang has been blamed for a number of attacks on South Korean exchanges in the past – with both domestic and international experts claiming the North is using crypto-hacking as a means to fund its regime.

Meanwhile, as reported in January, owner of Bithumb struck an important deal in attempt to build a new crypto giant.
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