S Korean cryptocurrency exchange hack sparks fresh tumble
11 June 2018
A cryptocurrency exchange hack in South Korea jolted holders of digital assets, fuelling a $46 billion rout and extending this year’s bitcoin slump to more than 50 per cent.
The hack on a South Korean exchange sparked fresh concerns about the safety of the digital units.
The attack on Coinrail comes months after Japanese firm Coincheck said it had lost more than $500 million in a January hack. Coinrail did not specify the value of the currency that was taken in the attack at the weekend but said it was working with authorities and other coin developers to track down the culprits.
The firm, which trades more than 50 cryptocurrencies, added that it had frozen all exposed coins —Fundus X, Aston, and Enper — and other units had been taken offline in a “cold wallet”.
The news sent cryptocurrencies tumbling, with bitcoin losing about 13 per cent, ethereum down 12 per cent and ripple almost 20 per cent, according to AFP, as traders fretted over the safety of their investments.
The hack brought an abrupt end to two weeks of calm for the biggest virtual currency and reignited concerns about the security of lightly regulated crypto exchanges. The venues have come under growing scrutiny in South Korea, the US and other large economies in recent months amid a range of issues including thefts, market manipulation and money laundering.
According to Bloomberg, bitcoin had dropped 11 per cent since 5 pm New York time on Friday and was trading at $6,784.04 as of 10:21 a.m. in Hong Kong today, bringing its year-to-date loss to 53 per cent. Most other major virtual currencies also slumped,
sending the market value of digital assets tracked by Coinmarketcap.com to a nearly two-month low of $294 billion. At the height of the global crypto-mania in early January, they were worth about $830 billion.
South Korea is one of the biggest markets for trading in digital currencies but the boom in their popularity has forced the government to tighten regulations, following similar moves in other countries.
Enthusiasm for virtual currencies has waned partly due to a string of cyber heists, including the nearly $500 million theft from Japanese exchange Coincheck Inc. in late January. While the latest hacking target –South Korea’s Coinrail - is much smaller, the news triggered knee-jerk selling by investors.
“This is ‘If it can happen to A, it can happen to B and it can happen to C,’ then people panic because someone is selling,” said Stephen Innes, head of Asia-Pacific trade at OANDA.
“The markets are so thinly traded, primarily by retail accounts, that these guys can get really scared out of positions,” he said. “It actually doesn’t take a lot of money to move the market significantly.”
Coinrail said in a statement on its website that some of the exchange’s digital currency appears to have been stolen by hackers, but it did not quantify the value. Coinrail only said that it was cooperating with investigators and other exchanges to try and track down the perpetrators and recover the assets.
The exchange said it has managed to freeze all exposed NPXS, NPER and ATX coins, and that other cryptocurrencies are now being kept in a cold wallet, which isn’t connected to the Internet and is less vulnerable to theft. The statement is the only content available on the exchange’s homepage.
Coinrail trades more than 50 different cryptocurrencies and was the world’s 98th most active venue, with a 24-hour volume of about $2.65 million, according to data compiled by Coinmarketcap.com.