South Korea’s Bithumb is one of the oldest and largest cryptocurrency exchanges in Asia, once commanding nearly half of the country’s digital asset trading volume. At its peak, it was considered a gateway for Korean investors into global crypto markets.
But Bithumb has also become synonymous with a string of repeated exchange hacks and security breaches. From 2017 onwards, the exchange faced multiple high-profile incidents where millions of dollars in user funds were stolen, exposing major flaws in its internal controls and raising questions about industry-wide vulnerabilities.
This article traces the history of Bithumb’s hacks, examines the consequences for investors and the company, and analyzes the broader implications for crypto exchange security worldwide.
1. Background: Bithumb’s Rise in South Korea
Founded in 2014, Bithumb quickly became South Korea’s dominant exchange. By 2017, at the height of the first major crypto bull run, it reportedly accounted for more than 70% of South Korea’s Bitcoin trading volume and was one of the top exchanges globally by volume.
The exchange’s prominence, however, also made it an attractive target for hackers. South Korea, already a hotspot for cyberattacks from both criminal groups and state-sponsored actors, saw Bithumb emerge as a prime victim.
2. The 2017 Hack: A First Major Breach
In July 2017, Bithumb revealed that hackers had compromised employee computers and stolen personal data from 30,000 users. Although the initial breach was of customer data rather than funds, it soon became clear that millions of dollars in cryptocurrencies had been stolen from customer accounts.
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Estimated losses: $7 million in Bitcoin and Ethereum.
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Method: Phishing and malware targeting employee credentials.
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Impact: Thousands of customers filed complaints, and South Korea’s regulators began their first wave of investigations into crypto exchange security.
This incident marked the beginning of Bithumb’s long battle with credibility.
3. The 2018 Hack: $30 Million Theft
In June 2018, Bithumb announced it had lost more than $30 million worth of cryptocurrencies in another cyberattack.
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Attack vectors targeted Bithumb’s hot wallets, which were not adequately protected.
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The company temporarily suspended all deposits and withdrawals.
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Later, Bithumb claimed to have reduced the net loss to around $17 million after recovering part of the stolen funds.
This incident was particularly damaging because it highlighted how the exchange had failed to learn from its 2017 breach.
4. The 2019 Hack: $20 Million in XRP and EOS
In March 2019, hackers struck again, stealing nearly $20 million in cryptocurrency, including XRP and EOS tokens.
What shocked the industry was that this hack appeared to be an inside job:
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Suspicion grew after it was discovered the stolen assets had originated from Bithumb’s own hot wallets, despite previous promises to improve security.
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The company admitted the attack may have been conducted by insiders with privileged access.
For customers and regulators, this confirmed fears that Bithumb’s problems extended beyond external hackers—it faced serious internal governance failures.
5. Continued Attacks and Investigations
Bithumb’s struggles did not stop after 2019. The exchange faced:
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2020 Fraud Allegations: Its offices were raided by South Korean authorities amid allegations of fraud and suspicious trading activity.
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Regulatory Scrutiny: South Korea’s Financial Services Commission tightened rules around customer protection and exchange licensing, with Bithumb frequently under watch.
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Further Attempts: Reports surfaced of attempted hacks in subsequent years, though on a smaller scale than earlier breaches.
These repeated incidents tarnished Bithumb’s reputation and shook user confidence, though the exchange continued to operate.
6. Impact on Customers
The repeated hacks left lasting scars on Bithumb’s user base:
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Loss of Funds: While the company promised compensation for customer losses, many users reported difficulties in recovering funds.
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Suspension of Services: During each breach, withdrawals and deposits were frozen for weeks, trapping customer assets.
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Trust Deficit: Many Korean traders migrated to rival exchanges such as Upbit and Coinone, seeking greater stability.
The cumulative effect was a sharp decline in Bithumb’s market dominance.
7. Broader Implications for the Crypto Industry
Bithumb’s string of hacks underscored systemic issues within crypto exchanges:
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Hot Wallet Vulnerabilities
Most stolen funds came from hot wallets connected to the internet. Unlike cold storage, these wallets were constantly exposed to cyber risks. -
Weak Internal Controls
The suspected insider involvement in the 2019 hack demonstrated that external defenses alone are insufficient without proper governance and monitoring. -
Regulatory Lag
At the time of early hacks, South Korea and most countries lacked comprehensive frameworks to enforce exchange security standards. -
Industry Reputation
High-profile hacks eroded mainstream trust in crypto, feeding narratives that digital assets were unsafe and unregulated.
8. The Shift Toward Stronger Regulations
The Bithumb incidents became a catalyst for tighter oversight in South Korea. Regulators introduced new rules requiring exchanges to:
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Partner with banks for verified real-name accounts.
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Meet strict information security management system (ISMS) certification.
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Hold greater proportions of assets in cold storage.
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Establish insurance mechanisms to protect users.
These regulations forced exchanges to professionalize operations, though at significant cost. Some smaller exchanges shut down, while larger ones invested heavily in cybersecurity.
9. Comparison with Other Global Hacks
Bithumb is far from the only exchange to suffer devastating breaches. The crypto industry has a long history of such incidents:
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Mt. Gox (2014): 850,000 Bitcoin lost, triggering the first major crypto collapse.
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Coincheck (2018): $530 million in NEM tokens stolen in Japan.
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Binance (2019): $40 million worth of Bitcoin stolen, though later reimbursed.
Compared with these, Bithumb’s multiple breaches—spread over several years—created a unique narrative of repeated failure rather than a single catastrophic event.
10. Present Status of Bithumb
As of recent years, Bithumb remains operational, though its dominance in the Korean market has waned. It continues to face regulatory investigations, ownership disputes, and pressure to restore trust.
While improved security protocols have been introduced, the memory of repeated hacks continues to overshadow the brand, making it a case study in how reputational damage can outlast financial losses.
11. Timeline of Major Hacks
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2017: $7 million stolen, customer data leak.
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2018: $30 million theft (later reduced to $17 million).
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2019: $20 million hack involving XRP and EOS, suspected insider job.
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2020–2021: Regulatory probes, raids, and governance disputes.
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2022 onwards: Smaller attempted breaches and ongoing scrutiny.
12. Lessons for Investors
The Bithumb story offers clear lessons:
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Choose Exchanges Carefully – Reputation, regulatory compliance, and insurance policies matter more than trading volume.
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Self-Custody is Key – Investors should not keep significant funds on exchanges; hardware wallets and cold storage remain safer.
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Beware of Centralized Risks – Exchanges consolidate risk, making them lucrative targets for hackers.
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Demand Transparency – Users should push for clear disclosure of security measures and compensation mechanisms.
Conclusion
Bithumb’s repeated exchange hacks are emblematic of the growing pains of the cryptocurrency industry. They highlight the risks of centralized exchanges, the vulnerabilities of inadequate security practices, and the dire consequences of weak governance.
While Bithumb survived financially, its reputation never fully recovered, and its story has become a cautionary tale for both exchanges and investors worldwide. For the crypto industry, the lesson is clear: without robust security and accountability, trust can be lost far faster than it can be rebuilt.
