Bitfinex Hacked, Bitcoin Price Reacts

Aug 02, 2016 at 20:06 // News
Daniel Dabek

On August 2, 2016 18:16 UTC Bitfinex, Bitcoin and Altcoin exchange announced that it is dealing with a security breach that affects some of its Bitcoin wallet balances. Trading on Bitfinex is halted as well as Bitcoin and Altcoin withdrawals and deposits.

The leading Bitcoin and Altcoin exchange mentioned that they are now cooperating with law enforcement to address the theft. According to the announcement from Bitfinex, margin positions will be settled at Bitcoin’s market price at 18:00 UTC. The Bitfinex team is sorting out their accounts and the compromised account balances before resuming operations.

Trading on Bitcoin markets reached panic selling, realizing a decline of more than 8% starting within 15 minutes of the announcement from Bitfinex. Since Bitfinex is the top Bitcoin exchange including an active margin trading facility the effect throughout Bitcoin markets is significant. However, prices are scattered across the board where Bitstamp trading aggressively down to $555 whereas Chinese Bitcoin exchange Huobi is firm at $575. 

We have yet to hear about the scope of the theft that Bitfinex is experiencing so we do not yet know the damage incurred to the exchange.

“Bitfinex is the biggest Bitcoin trading exchange. It’s margin accommodation brings a lot of liquidity to the market. That is missing until they bring operations back online. Until then prices can be volatile. Definitely can attribute the decline in price to the exchange being hacked, however this could signal the entry point to many traders,” comment from Daniel Dabek, Founder and Architect of Safe Exchange and curator of Alt Coin Trading Community.

Simon Dixon, CEO

"No accusations but markets never change. Before every unexpected news announcement in almost all markets there is unusual activity. There was a big sell off before the Bitfinex security breach and that normally means somebody somewhere had good knowledge to short ahead of the fact. We can now speculate on the reason for the sell off and after seeing it time and time again I am more inclined to believe some big short sellers knew what was coming. This is not unique to crypto markets. "

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