Bitfinex: Cause of Bitcoin Hack Still 'Unknown'

Nearly two weeks after losing more than $60m in customer funds, Bitfinex reports it has not yet identified how the theft was carried out.

Aug 17, 2016 at 2:18 p.m. UTC
Updated Sep 11, 2021 at 12:27 p.m. UTC

Nearly two weeks after losing more than $60m in customer funds, Bitfinex reports it has not yet identified how the theft was carried out.

In a statement released earlier today, the exchange reported it had hired Ledger Labs, a blockchain consultancy previously contracted by ShapeShift following its own cybersecurity problems, to both investigate the theft as well as perform a balance sheet audit.

Bitfinex further said that it is "reassessing" storage options in light of the hack. The incident would force the exchange to impose a 36% haircut on customer holdings, a move that continues to stoke controversy.

For now, Bitfinex has suspended its use of tools provided by security partner BitGo and has begun utilizing a hot cold wallet set up to maintain funds. As part of that reassessment, Bitfinex said that it is currently storing most of its funds in so-called cold wallets – accounts that are not connected to the Internet.

The company also responded to criticisms circulating via social media alleging it had not contributed funds to help fuel the recovery.

The exchange said in the statement:

"Management has committed all reserves of the business with a view to making our customers whole. Moreover, any principals and employees of the business with any property on Bitfinex were subject to the loss allocation... We assure everyone that we feel the loss acutely, both as a company and as individual customers."

Elsewhere, Bitfinex acknowledged that it "held back certain amounts" to pay for security and financial audits, as well as a security system rebuild.

The exchange said some of its reserves would also be devoted to repurchasing digital tokens issued to customers to make up for losses.

"We are actively engaged with efforts to convert certain qualifying token-holders to shareholders of Bitfinex and to redeeming the remaining BFX tokens through a combination of new capital and earnings," the company said.

Lost executive image via Shutterstock

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