On Bithumb, Gun-jumping, and the Balina Precedent - Bitsonline

On Bithumb, Gun-jumping, and the Balina Precedent

It didn’t take long for Korean exchange Bithumb to face accusations of impropriety — after reports of its $30 million USD hack surfaced — on the world’s favorite unfiltered soundbite publishing platform Twitter. While there are legitimate questions to be answered, gun-jumping was the order of the day among influential crypto Twitter identities.

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Bithumb’s Impeccable Was Timing

As part of an industry-wide three-month probe, Bithumb had been under investigation by South Korean authorities for suspected tax fraud. Despite having been cleared of any wrongdoing, the exchange agreed to pay back-taxes of around 30 billion KRW (roughly $28 million) for the 2014 to 2017 fiscal years. That news was only announced on June 8th.

Reports of Bithumb’s $30 million hack on June 20th proved eyebrow-raising not for the size of the hack itself — which is fairly small — but for its unfortunate proximity to the exchange’s unforeseen tax bill. Influential Belgium-based Twitter identity @WhalePanda pointed out the irony to his almost 200 thousand followers:

Whale Panda, a loose associate of Monero’s Riccardo Spagni, does caution followers “Don’t take me too serious, unless I’m serious.” But in this case it is not entirely clear whether he truly suspects treachery or otherwise. Either way, it was a shrewd — albeit cynical — observation.

The Balina Precedent

Allegedly, pretending to be hacked to avert tax authority scrutiny or to feign an income loss in front of an audience is not novel.

In April this year, Youtube crypto trader and educator Ian Balina was allegedly hacked for about $2 million during a livestream Youtube video tutorial. In the middle of the livestream, he paused, apparently having received a message: “Ian, did you know that somebody transferred all your tokens from your account?”

He followed up after the incident with tweets and Medium posts explaining how he had been hacked. The tweets and posts have since been deleted. According to one Redditor, Balina tweeted to his followers that his stolen coins were about to be sold on kucoin. That tweet was almost immediately deleted. The coins from the wallet under watch were then sent to kucoin after the tweet, leading some to believe Balina had made a misstep and accidentally tweeted the warning before he himself sent the coins to kucoin.

The jury remains out on exactly what happened, and Balina has since found success in rap music, best illustrated in his song Moon Lambo, featuring Drew Morisey. But, if Reddit and Twitter chatter is anything to go by, he is widely believed to have publicly pretended he was hacked to reduce his tax bill.

South Korean Crypto a Hacker’s Paradise, Den of Iniquity

The June 20th hack was Bithumb’s second major security lapse, following a February 2017 incident that saw data of 31,000 of its users breached, leading to some phishing thefts. It also follows the $40 million hacking of Coinrail slightly over a week ago.

After announcing widespread investigations into exchanges, South Korean authorities have arrested former CoinNest executives on charges of fraud and embezzlement and raided Upbit on suspicions of fraud, (although the Kakao subsidiary has since been cleared of any wrongdoing). Coinone remains under investigation for some of its margin trading activities.

These are all services for which Koreans once paid a 50 percent premium. Accusations of wrongdoing by Bithumb may prove inaccurate, but in a sector where white collar crime is evidently rampant and where investors recently scarred by one hack commonly face almost immediate news of another, doubts about Bithumb’s integrity are understandable.

Have your say. Are these accusations and suspicions fair and reasonable?


Images via Pixabay

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