Bitcoin drops 20% after $70M worth of bitcoin was stolen from Bitfinex exchange

Bitfinex, one of the most popular cryptocurrency exchanges online, has suffered a major hack. The company has posted a note on its website detailing the security breach, and while it doesn’t mention a total amount, one of their employees confirmed on Reddit that the total amount stolen was 119,756 bitcoins.

That amount converts to about $77,000,000 based on a price of $650 USD per bitcoin, which is about what bitcoin traded at over the course of the last week.

After news of the hack spread, the price of bitcoin dropped almost 20 percent, settling in around the current price of $540 USD per bitcoin. It’s not exactly clear why the price dropped, but it’s likely bitcoin investors got nervous about potential hacks on other exchanges and decided to sell off their bitcoin holdings, which led to a rapid decrease in price.

So how exactly did the hack happen? It’s not really clear yet, and the exchange hasn’t released any additional information beyond saying they incurred a loss and are suspending operations, and that USD funds and other cryptocurrency balances haven’t been compromised.

We do know that Bitfinex’s platform used BitGo, a Palo Alto-based bitcoin security company that allows exchanges to provide segregated, multi-signature wallets for each customer’s funds. This is a supposed security improvement over exchanges that merge customers’ funds into large, communal wallets. This method of maintaining segregated wallets for each user on the exchange also means that users can keep tabs on their wallet balance at all times, which is how some Bitfinex users have been able to see that funds have been removed from their wallets.

BitGo tweeted earlier today that they “found no evidence of a breach on any BitGo servers.

So how exactly did the hack happen? It’s not really clear yet, and the exchange hasn’t released any additional information beyond saying they incurred a loss and are suspending operations, and that USD funds and other cryptocurrency balances haven’t been compromised.

We do know that Bitfinex’s platform used BitGo, a Palo Alto-based bitcoin security company that allows exchanges to provide segregated, multi-signature wallets for each customer’s funds. This is a supposed security improvement over exchanges that merge customers’ funds into large, communal wallets. This method of maintaining segregated wallets for each user on the exchange also means that users can keep tabs on their wallet balance at all times, which is how some Bitfinex users have been able to see that funds have been removed from their wallets.

BitGo tweeted earlier today that they “found no evidence of a breach on any BitGo servers.

This AI stockbroker could be the future of financial advising

Hong Kong-based 8 Securities has come a long way over the past few years. When we first talked to the startup back in 2012, it had just pulled in $8 million to build up its stock trading app. Now, the company has more than $600 million worth of currencies flowing through its pipes, and it’s betting big on artificial intelligence.

Named “Chloe,” 8 Securities is planning to launch a virtual advisor service that uses machine learning to give investment advice.

The AI will be used to coach, educate, and advise users on their investments, says CEO Mikaal Abdulla. “She treats a $100 account the same way she would a $1 million account.”

“She is completely rational and guided by sound measurements,” he adds. “Investors tend to be emotional and irrational.”

Chloe at work.

IMAGE: 8 SECURITIES

A digital teacher

Like the U.S.-based Robinhood (which, by the way, is soon coming to China), 8 Securities allows users to buy and sell stocks from their phones, without paying any commission. But being based in Hong Kong makes for a very different business than in Americ

“There is not enough investing education in the market,” Mikaal says. “Perhaps only 10 percent of the investing population is suited to trade their own portfolio where 90 percent need some level of guidance and advice.”The company mainly serves users from Japan and greater China (namely mainland Chinese citizens who have bank accounts in Hong Kong). That means dealing with wildly different investment styles and cultural norms.

Some people hold on to stocks too long, and sell after they’ve hit their peak — others buy and trade too quickly, and miss out on potential opportunities. The 8 Securities team is banking on Chloe sorting that out for its users when it — she? — is rolled out this summer. The AI can be personalized to a user’s preferences, such as their tolerance for risk, and can work as an always-on advisor for all things finance.

Also on the horizon is 8 Securities’ launch in mainland China. Chinese citizens are legally allowed to invest $50,000 per year abroad, but they typically have to do it via a place like Hong Kong, and it’s hardly straightforward.

Both Robinhood and 8 Securities believe that the mainland’s regulations are changing for the better, though.

“China is critical to our long-term strategy,” says Mikaal. “As [the] regulations evolve, so will we. I think those companies that take shortcuts in entering China will fail.”

The mainland… and beyond!

In addition to its user-centric stock trading, 8 Securities is also diving deeper into financial services. The startup plans to target active traders with offers for margin trades (i.e. buying stock with loaned capital) and also expand its services aimed at businesses.The company has raked in $25 million in funding since its founding, and is in the process of raising another $20 million to power its expansion programs throughout the region. Mikaal says the team is currently exploring potential markets in Singapore, Indonesia, Australia, the Middle East, India, and the U.S.But 8 Securities’ immediate goal is getting Chloe up and running. Offering no-fee trading is one way to stand out, but — and this may be a big but — if the AI proves to be more effective than human advisors, then the company could have a big advantage over the competition.“We are putting most of our resources and innovation behind the mobile robo-advisor because that is where we see the future,” says Mikaal. “I personally believe that index investing through a robo-advisor service will become the norm for the next generation of investors.”

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This article originally published at Tech in Asia here