Bitcoin price plunges after cryptocurrency exchange is hacked
Bitcoin price plunges after cryptocurrency exchange is
hacked
Security fears rise as South Korea’s Coincheck loses
about £28m of virtual currency
Julia Kollewe Mon 11 Jun 2018 10.06 EDT First published
on Mon 11 Jun 2018 04.40 EDT
There has been a sharp drop in the price of bitcoin and
other virtual currencies after South Korean cryptocurrency exchange Coinrail
was hacked over the weekend.
A tweet from Coinrail confirming the cyber-attack sent
the price of bitcoin tumbling 10% on Sunday to two-month lows.
The world’s best-known cryptocurrency lost $500 (£372) in
an hour, dropping to $6,627 on the Luxembourg exchange Bitstamp, while most
other digital currencies also recorded large losses.
The latest attack highlights the lack of security and
weak regulation of global cryptocurrency markets.
Coinrail later said in a statement on its website that
its system was hit by “cyber intrusion” on Sunday, causing a loss for about 30%
of the coins traded on the exchange. It did not quantify the value, but the
local Yonhap news agency estimated that about 40bn won (£27.8m) worth of
virtual coins was stolen.
Coinrail said: “Seventy percent of total coin and token
reserves have been confirmed to be safely stored and moved to a cold wallet
[not connected to the internet]. Two-thirds of stolen cryptocurrencies were
withdrawn or frozen in partnership with related exchanges and coin companies.
For the rest, we are looking into it with an investigative agency, related
exchanges and coin developers.”
Police have begun an investigation, according to the
Korea Herald, which cited a spokesperson as saying: “We secured the access
history of Coinrail servers and we are in the process of analysing them.”
Bitcoin was trading at about $6,750 on Monday afternoon –
down from an all-time peak of almost $20,000 in the week before Christmas. In
February, it fell to $5,900.
South Korea is one of the world’s major cryptocurrency
trading centres, and is home to one of the busiest virtual coin exchanges,
Bithumb.
There have been a series of thefts from cryptocurrency
exchanges in recent months. Japan’s Coincheck was hacked in January, with more
than $500m-worth of digital currency stolen. It started reimbursing customers
in March, but faces two class-action lawsuits. In December, the South Korean
exchange Youbit shut down and filed for bankruptcy after being hacked twice.
Naeem Aslam at online trading platform ThinkMarkets said:
“The question is: is there any limit to these hacks? After every few months, we
are seeing the same pattern emerging. This is the result of loose regulatory
control and regulators must step in to protect the consumers. Anyone who wants
to do anything with exchanges should be forced to adopt high-grade security and
regular security upgrades.”
The Wall Street Journal (£) reported on Friday that US
regulators were investigating potential price manipulation at four major
cryptocurrency exchanges. The investigation comes six months after CME Group
launched bitcoin futures. Coinbase, Bitstamp, itBit and Kraken have been asked
to share trading data related to the futures contracts.
Analysts said bitcoin volatility was fading, after the
price increased threefold between mid-November and mid-December. David Jones,
the chief market strategist at trading platform Capital.com, said this was
driven by increased publicity as bitcoin went from being a niche IT interest to
becoming mainstream, but added that the hype has now gone.
He noted that Facebook and Google had banned
cryptocurrency adverts. “Plenty of latecomers to the cryptocurrency rally have
had their fingers burnt, have taken their losses (or are still sitting on them)
and have vowed never to return,” Jones said. “Activity amongst the wider public
has slowed. Arguably, the introduction of a listed futures contract for bitcoin
has also calmed the wilder market moves.”
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