South Korean Bitcoin Exchange Goes Bankrupt After Getting Hacked Again

December 20, 2017

Following a significant loss of Bitcoin assets due to its second alleged hacking this year, South Korean cryptocurrency exchange Youbit has announced that it is now shutting down and filing for bankruptcy.

The cyber attack, which reportedly caused a loss worth 17% of the exchange’s total assets, has further raised security concerns in local cryptocurrency trading in South Korea, Reuters reports.

Youbit suffered its first hacking back in April, losing almost 4,000 Bitcoin in the process. According to local media reports, South Korea’s spy agency has linked North Korea to the attack. Without elaborating on the actual amount lost in the latest attack, Youbit announced on its website that 17% of its total assets were indeed stolen via hacking at 4:35 a.m. local time on Tuesday.

“There were no additional losses, as other coins were in the cold wallet,” Youbit’s owner, Yapian, said Tuesday.

Due to the incident, all Youbit customers’ Bitcoin assets have been temporarily marked down to 75% of its total value per individual until the company moves through bankruptcy proceedings. As a precaution to minimize further customer losses, the exchange has also seized trading.

Youbit is a minor player in South Korea’s robust cryptocurrency market, with Seoul-based Bithumb, the world’s busiest virtual currency exchange, covering about 70% of the local market share.

Cyber Crime agency Korea Internet & Security Agency (KISA) has confirmed that it has started an investigation into the hacking along with the police, according to the BBC. Bitcoin’s continuous surge in valuations in recent months has reportedly made cryptocurrency exchanges and wallets constant targets of cyber attacks.

Bitcoin has been so well received in South Korea that even the prime minister was prompted to warn that cryptocurrencies might corrupt the nation’s youth. The Bitcoin frenzy in Korea has reached to a point where locals are trading Bitcoin at a premium of about 23% higher than prevailing international rates, Bloomberg reports.

Security experts warn that they will continue to become more vulnerable to cyber-crime attacks as Bitcoin further increases its value in the future. Bitcoin has traded its highest record so far at over $19,000 per coin on Monday before dropping back to $16,800 per bitcoin the following day.

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