Finding the right exchange is a crucial step for a new bitcoin trader. Many digital currency exchanges have been hacked, including Bitfinex, which has at times been described as the world’s largest bitcoin exchange.
Bitfinex suffered a hack during the summer of 2016, during which it lost roughly US$70 million worth of bitcoin. The exchange survived the experience, spreading the losses it suffered across all accounts and compensating account holders with newly created digital tokens, which it in turn bought back.
While Bitfinex managed to pull through a hack unscathed, Tokyo-based exchange Mt. Gox was also compromised by nefarious parties, which resulted in the loss of US$460 million. Mt. Gox went into bankruptcy, and a trustee named Nobuaki Kobayashi started selling digital currencies on behalf of creditors in March 2018.
Investors can benefit substantially from conducting their due diligence on any exchanges before using them. There is a short list of digital currency exchanges that have not been hacked at the time of this writing. For instance, Coinbase has never been hacked. However, its customers have been hacked after falling victim to elaborate schemes.