Bitcoin Plunges After Hacking of Exchange in Hong Kong

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from The New York Times,

The digital currency Bitcoin plunged on Wednesday after Bitfinex, an exchange based in Hong Kong, said it had been hacked and funds stolen.

The exchange said it had halted trading, deposits and withdrawals while it investigated which users had been affected. Bitcoin’s trading value fell about 20 percent early on Wednesday, local time in Hong Kong, but had recovered about half the loss by early afternoon.

Zane Tackett, Bitfinex’s director of community and product development, did not immediately respond to requests for comment. But he said in a posting on Reddit that 119,756 Bitcoins had been stolen.

Before the hacking was made public, that number of Bitcoins would have been worth about $72 million. Now that the currency has slumped, the figure is closer to $65 million. The exchange, one of the world’s largest, said in a blog post that any outstanding settlements would be made at the price before the hacking. “As we account for individualized customer losses, we may need to settle open margin positions, associated financing, and/or collateral affected by the breach,” Bitfinex said in the post. It added that customers’ losses would be addressed later.

Security breaches of this type have raised questions about the viability of Bitcoin. The most notable episode was the collapse in 2014 of Mt. Gox, an exchange based in Tokyo, in which hundreds of thousands of Bitcoins were stolen in a heist that experts and law enforcement officials are still trying to unravel. This past June, a hacker stole more than $50 million worth of Ether, another digital currency, from an experimental virtual currency project called the Decentralized Autonomous Organization.

Although some view Bitcoin as the future of finance, allowing for faster and cheaper transactions, the Bitcoin community has been rived with infighting over the development of the technology. The blockchain ledger, part of the coding that underlies the currency, has also gained more mainstream traction, as banks see an opportunity to use the technology to speed up trades.

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