A cryptocurrency exchange in South Korea collapsed on Tuesday after it suffered a second cyberattack in eight months and lost a large amount of its digital-currency reserves.
Yapian, the company that operates a Seoul-based exchange called Youbit, suspended digital-currency trading and filed for bankruptcy after its systems were hacked in the predawn hours of Tuesday. The exchange trades 10 virtual currencies including bitcoin and ethereum.
Yapian said in a statement that the latest security breach caused it to lose 17% of its total assets. The company didn’t specify the type of virtual currencies that were stolen or the financial value of its losses. The previous cyberattack, in April, also resulted in losses from its reserves.
Users of the exchange with digital coins in their online accounts were told by Youbit on Tuesday that they could withdraw about 75% of their cryptocurrency for the time being. The remaining balances would be returned after the company goes through bankruptcy proceedings, it said.
The threat of cyberattacks is heightening online-security concerns in the cryptocurrency markets as prices of bitcoin have surged over the past year and drawn a flood of investors and speculators to digital currency trading, especially in Asia.
After Youbit’s April cyberattack, which resulted in bigger losses than the latest hack, the exchange’s operator said it boosted security measures by storing more digital coins in hard wallets that effectively keep the currency offline, as opposed to online exchange accounts. It also made repairs to its system, but the latest attack proved those efforts were inadequate.
South Korea has recently become a hotbed for bitcoin and other cryptocurrency trading, drawing many young people and other retail investors to the market. A surge in trading volumes and investor fervor has drawn the attention of South Korea’s government, which last week proposed measures to cool speculation. Regulators there also fined BTC Korea.Com Co., the operator of a large cryptocurrency exchange, for compromising the personal information of thousands of its users after a hack earlier this year.
Security remains one of the most critical issues facing the industry. Earlier this month, more than $70 million worth of bitcoin was stolen from a cryptocurrency-mining service called NiceHash after a security breach. The company halted operations more than a week ago and has yet to resume.
One cautionary tale is that of Mt. Gox, once the world’s largest bitcoin exchange. The company lost virtual currency valued at hundreds of millions of dollars in 2014 and was forced to file for bankruptcy protection.
Even so, the price of bitcoin has surged this year and has shown little sign of losing momentum. Bitcoin recently traded around $18,800, according to research site CoinDesk. It started 2017 just below $1,000.
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