Bithumb Wallet Consolidation Allegedly Causing Bitcoin Network Congestion

A dramatic spike in the Bitcoin network's activity has people wondering whether Bithumb is congesting the blockchain as a result of its recent hack.

At a time when transaction fees for Bitcoin have been at a relatively low level of between $0.60 and $0.80, a flurry of transactions from several wallets started flooding the network with ridiculous transaction fees of 0.1 BTC, or around $661 at press time.

Certain influential individuals in the cryptocurrency community are blaming the Bithumb hack for this. What’s even more startling is the fact that the transactions themselves don’t involve massive sums of Bitcoin. The vast majority of them accumulate around 0.3 BTC ($1,997) from several wallets, resulting in 0.2 BTC ($1,331) reaching their destination.

Further down the chain, we can see that some transfers included larger sums like 0.4 BTC or even 2 BTC.

These bizarre transactions on the Bitcoin blockchain all appear to be originating from thousands of wallets, all sending their coins to one single wallet — 36MVds9jUMHsDTvww9hzokSPffapHdT8Jm. At the time we are writing this, the most recent entry in the wallet happened only three hours ago.

People took notice of this as soon as the Bitcoin network got congested, making fees rise to levels we haven’t seen since late February. The mempool also rose sharply, driving itself up to an impressive 25 MB.

WhalePanda, an influential Twitter account that reports on cryptocurrency insights and rumors, suspects that this congestion can be correlated to the Bithumb hack. According to this influencer, the exchange is either consolidating funds to a cold storage address or the hacker is emptying everything.

The former suspicion seems more likely than the latter, as Bithumb froze all withdrawals and deposits. The company’s deleted tweet which accidentally disclosed the amount of funds stolen by the hacker also said that it would be transferring all user assets to a cold storage wallet.

We have our conclusion and our culprit, but there’s still one question that baffles everyone: Why pay a $661 transaction fee for these transfers when $3-4 will do?