A cyber attack has forced one of South Korea’s cryptocurrency exchanges to stop trading and file for bankruptcy after losing a large chunk of its reserves.
Yapian, which operates the Youbit exchange in South Korea, suspended trading on Tuesday after it was hacked, causing it to lose 17 per cent of its assets, according to a statement from the company.
The attack marks the second on Youbit in only eight months after the exchange experienced a breach in April, according to local media reports.
The exchange, which launched in 2013, facilitates the trading of 10 digital currencies, including bitcoin, ethereum and ripple.
Youbit said in an announcement that investors could withdraw about 75 per cent of their digital coins. It said the remainder “will be paid” once the company completes the bankruptcy process after “the final settlement is completed”.
The exchange had no information on the perpetrator of the attack.
The hack comes as investors in South Korea, including students, flock to bitcoin. The price of the cryptocurrency has touched a number of fresh highs in the past month, peaking at $19,666 in mid-December, according to Reuters. The currency was trading at $16,989 early on Wednesday, up from around $1,000 at the start of the year.
Demand for bitcoin is strong among South Korea’s technology-savvy populace. Buyers of bitcoin in South Korea have recently been paying premiums of more than 20 per cent for the cryptocurrency, compared with international rates.
However, the latest attack puts the spotlight on security concerns, as rising valuations render cryptocurrency exchanges enticing targets for hackers.
Hong Kong-based Bitfinex was hacked in August 2016, leaving investors nursing losses in the region of $70m.
Mt Gox, once the largest bitcoin exchange globally, based in Tokyo, filed for bankruptcy in 2014 when nearly 850,000 bitcoins — worth some $450m at the time — were lost.
Lee Nak-yon, prime minister of South Korea, warned last month that young people were speculating riskily on the asset to make a quick profit, and that digital currencies were used for illegal activities, such as drug dealing.
To rein in the nascent sector, South Korea is considering taxing capital gains from cryptocurrency trading, and banned initial coin offerings in September. ICOs allow start-ups to raise funds by selling digital tokens — or coins — to investors, bypassing venture capital and other mainstream sources of funding for fledgling firms.
In the same month, China also declared ICOs illegal, and ordered a halt to fundraising using digital coins.
Source :-https://amp.ft.com/content/aa9fdd64-e536-11e7-97e2-916d4fbac0da
