Bitfinex Hacked: Users Urged to Change Deposit Addresses

Bitfinex, the leading bitcoin exchange by volume in US dollars, reported earlier today on their blog that they have been hacked, and are asking all of their customers to cease using old deposit addresses while they are working on creating new wallets.

“We believe that our hot wallet keys might have been compromised.”
— – Bitfinex Announcement

The announcement claims that the attack was only successful against the hot wallet portion of user’s deposits,  the short-term bitcoin wallet that actively uses funds at the time of trading. The company admits the hot wallets are “theoretically vulnerable to attack.” Bitfinex assured customers that over 99.5% of their deposits are secure, kept in multi-signature “cold” wallets.

Bitfinex is a popular bitcoin exchange and full crypto-asset trading platform, based in Hong Kong. Owned and operated by iFinex Inc. (Bvi), and started in 2014, they were the first exchange to offer more exotic financial tools such as margin trading and swaps, giving many businesses a way to hedge their bitcoin positions. Today Bitfinex says that their website and trading engine are still in the “beta” stage, despite their position in the market.

A few hours after the announcement displayed deposit addresses were updated on the company website, and Bitfinex continued to work towards normal operation. Withdrawals were suspended while their new wallet synced with third party services, but the company maintains that trading was not affected.

Security has always been Bitfinex’s top priority.

While some commentators may look at this hack as an example of how far bitcoin has yet to come, before its is a safe and secure industry to invest in, others note that by keeping customer funds in multi-signature wallets with newer bitcoin specific exchanges is infinitely more secure than previous iterations. Examples such as the notorious Magic The Gathering Online eXchange (MT GOX) still reverberate around the mass media. The original purpose of MT GOX was to trade playing cards.

“We pride ourselves on being the most secure bitcoin exchange.”
— – Bitfinex website

If Bitfinex is correct about their active trading account, or hot wallet, only containing no more than 0.5% of user funds, it appears to be an amount the company is willing to part with to protect their market share. “Although this incident is unfortunate, its scale is small and will be fully absorbed by the company.” states the company announcement.