Prominent Bitcoin exchange hacked wiping $65 million from wallets

Prominent Bitcoin exchange Bitfinex was hacked Wednesday, leading to a rumoured loss of bitcoin worth up to $65 million.

The Hong Kong company halted trading on its website, where a notice states: "Today we discovered a security breach that requires us to halt all trading on Bitfinex, as well as halt all digital token deposits to and withdrawals from Bitfinex."

Its website confirms that some of its users lost bitcoin. The company's head of community and product development, Zane Tackett, has been answering questions on Reddit's Bitcoin community forum, and stated that 119,756 bitcoin were lost.

Tackett also added that "there was nothing users could have done" to prevent having their digital money stolen.

The company assumed responsibility for the breach. Tackett said: "It does look like it's on us."

Palo Alto-based Bitgo confirmed its servers weren't hit.

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Tackett added that the company was not using "cold" bitcoin wallets on the site -- offline servers storing bitcoins -- that could be used to retrieve reserves. As all of its wallets were online, it had to halt the service to stop further breaches.

Investors shaken by the Bitfinex hacking pushed down bitcoin prices, which tumbled nearly 20 percent within the day after the announcement was made.

Arthur Hayes, CEO at trading firm BitMEX, told Coindesk the incident would not be good for bitcoin prices: "A high profile hack is not good for sentiment and curtails the ability for market makers to keep an orderly market."

This is the second high profile Bitcoin scandal in Hong Kong, after another exchange in the country went belly up in 2015. MyCoin's founders abruptly folded the company and absconded with a reported $8.1 million belonging to 3,000 clients.

After the Bitfinex incident, investors have been tweeting in disbelief:

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UPDATE: Aug. 3, 2016, 4:46 p.m. AEST Corrected quotes attributed to Zane Tackett.