Bitcoin value falls off cliff after $77M stolen in Hong Kong exchange hack

The value of bitcoins plummeted 20 percent after almost 120,000 units of the digital currency were stolen from Bitfinex, a major Bitcoin exchange.

The Hong Kong-based exchange said it had discovered a security breach late Tuesday and has suspended all transactions.

“We are investigating the breach to determine what happened, but we know that some of our users have had their Bitcoins stolen. We are undertaking a review to determine which users have been affected by the breach. While we conduct this initial investigation and secure our environment, bitfinex.com will be taken down and the maintenance page will be left up,” said the company on its website.

Bitfinex added that it was working with law enforcement to investigate the theft and planned to resume operations despite the hack.

It said any settlements for “open margin positions, associated financing, and/or collateral affected by the breach” will be at the market prices as of 18:00 UTC. “We will look at various options to address customer losses later in the investigation,” Bitfinex continued.

“While we are halting all operations at this time, we can confirm that the breach was limited to Bitcoin wallets; the other digital tokens traded on Bitfinex are unaffected,” added the company.

The news comes just two weeks after the Bank of England warned that Bitcoin is “peppered with flaws” as a currency.

According to comments by Zane Tackett, director of community at Bitfinex, on Reddit, a total of 119,756 bitcoins were stolen—at an average value of $650 per Bitcoin, that amounts to more than $77 million. The hack caused the currency drop as investors sold off their Bitcoin holdings cheaply. At its lowest following the hack, one bitcoin was worth about $480, but its value has since rallied to about $550.

Stealing bitcoins seems to be de rigueur for the fledgling cryptocurrency and so far hasn't really affected its long-term exchange value. Bitcoin has proven extremely resilient to such turmoil. Bitcoin crashed in 2013, losing nearly half of its value in six hours; last February it was estimated that hackers had easily stolen $95,000 from poorly secured Bitcoin wallets; and in May, Hacking Team hacker Phineas Phisher claimed to have stolen about $11,000 in bitcoins and donated them to Kurdish anticapitalists.