Bithumb had a net loss of $180 million in 2018, or 205 billion won. The total losses came by as a result of the bitcoin (BTC) bear market, according to the Korea Times news site. Data from BTCKorea.com, which runs the platform, showed that it had record-breaking losses, even as the company grew sales by 17.5%.
A spokesman was quoted as saying privately,
In terms of sales, we saw a 17% increase, and we continue to increase overseas investments.
These results follow after a year of ravaging losses across the crypto industry. Bitcoin, the lead cryptocurrency, maintained a bear market throughout the year, breaking all the previous records. Other altcoins did not fare as well, with many tokens falling out of the charts.
Reportedly, Bithumb’s performance matched that of other companies within the space. For instance, Nvidia, which makes chips for Ethereum mining rigs, suffered losses as miners got smaller returns from their mining efforts. Bitmain, the mining giant and rig manufacturer, also saw their profits decline in the last quarter of 2018 and the first quarter of 2019.
Security Breaches, Staff Cuts
The bear market is not the only problem that Bithumb has faced in the past year. The exchange got hacked twice in a span of a year, leading to massive losses. In August 2018, a security breach allowed hackers to disappear with 35 billion won (approximately $30 million). The exchange, in order to keep its license, paid back the money to investors whose funds were compromised.
In March 2019, the Bithumb suffered a smaller attack, which left it with a massive debt of $12 million. This smaller breach was allegedly an insider job. With these big chunks swindled off from the Bithumb, the company announced major staff cuts.
The company, in a bid to protect the rest of the funds, the company has invested in secure cold storage facilities. Cold storage refers to a form of cryptocurrency vaults that are not accessible via the internet. Previously, the compromised funds were stored in hot wallets, which can be accessed remotely. The hot wallets had allowed hackers to gain access to the coins and siphon off the money.
Bithumb is currently doing an external audit to prove to its customers that the funds in the exchange are in cold storage. This will bring confidence from the investors and help it get back on its feet.
Do you think that the bitcoin bear market is over? Will this help Bithumb recover? Let us know in the comments section below!
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