Bitfinex frightened investors by going offline for a few hours and undergoing unexpected maintenance. The news have not affected crypto prices, which turned to the green without trouble, Bitcoin rising to $7.622.69.
The only hint at the nature of the attack is an extreme load of orders, suggesting a DDOS attack. Bitfinex announced that all funds are safe.
https://twitter.com/bitfinex/status/1003997834784493569
Later, Bitfinex clarified the nature of the attack, which caused two outages over the last few hours:
“The cause of the outage has been identified. A DDoS attack was launched soon after we restarted operations. The previous outage was caused by issues with one of our infrastructure providers. While the platform was recovering, the attack caused extreme load on the servers.”
The reason a Bitfinex crash was frightening was the previous hack that lost significant funds in 2016. Bitfinex lost 120,000 Bitcoin, later performing a “haircut” on all trader wallets.
The other cause for concern is the Tether (USDT) trading on Bitfinex. For months now, there have been fears and concerns that Bitfinex would close, making Tethers worthless. Connections have been found between the Bitfinex exchange and the company issuing Tethers, and in January, the exchange received a subpoena from the Commodities Futures Trading Commission. However, for now, Bitfinex remains operational, with no further troubles despite the skepticism.
But even now, Binance has the biggest USDT wallet, and Bitfinex has decreased the fixed-price tokens held on the exchange. USDT trading makes up more than 17% of Bitcoin volumes, and Bitfinex still concentrates more than 28% of all Bitcoin trades.
Exchanges remain one of the riskiest elements in the crypto ecosystem. Beyond outright attacks against wallets, as was the case with Coincheck, exchanges now have to cooperate in curbing 51% attacks and double-spending. Exchanges may see funds deposited to their wallets, then withdrawn as the transaction is rolled back - leaving the exchange with a balance of non-existent coins.
This article appeared first on Cryptovest
