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Bitcoin plunges after hackers breach HK exchange, steal coins

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Bitcoin plunged after one of the largest exchanges for trading the digital currency disclosed it had been hacked.

[HONG KONG] Bitcoin plunged after one of the largest exchanges for trading the digital currency disclosed it had been hacked.

Bitcoin slumped 7.3 per cent against the dollar as of 9:40 am on Wednesday in Tokyo, bringing its two-day drop to 15 per cent. Prices also sank 6.2 per cent on Monday, although it was not clear if that initial move was related to the hack.

Hong Kong-based exchange Bitfinex said on Tuesday that it halted trading, withdrawals and deposits after discovering the security breach. The exchange said it was still investigating details and cooperating with law enforcement, but acknowledged that some bitcoin have been stolen from its users.

"We will look at various options to address customer losses later in the investigation," it wrote in a blog post.

"We ask for the community's patience as we unravel the causes and consequences of this breach."

Bitfinex was the largest exchange for US dollar-denominated transactions over the past month, according to bitcoincharts.com. Chinese exchange OKCoin was the largest overall bourse for trading in the digital currency, over 90 per cent of which is denominated in the Chinese yuan.

The price drop was reminiscent to the market reaction after Tokyo-based Mt Gox - then the largest bitcoin exchange in the world - disclosed it was hacked in February 2014 and filed for bankruptcy weeks later. Bitcoin prices plunged 30 per cent that month.

Bitfinex halted trading in all digital currencies, including ethereum, but said losses were limited to bitcoin.

"Bitfinex is in lockdown/investigation mode, so we're not going to know anything for sure for a few days," Peter Todd, one of the key developers who work on bitcoin, wrote in an e-mail.

BLOOMBERG