A Korean cryptocurrency exchange has been forced to shut down, after it was hacked for the second time in less than eight months.
Youbit (formerly Yapizon), which is used to trade Bitcoin and other digital currencies, was first breached in April, when about 4,000 Bitcoins were stolen. It says that 17 per cent of its assets were lost in the most recent attack, although did not disclose their value.
South Korea’s Internet and Security Agency (Kisa) linked the first attack to North Korea – as well as similar incidents on the Bithumb and Coinis exchanges. It has not released any information on who might be behind the new hack.
Youbit said that all customers’ cryptocurrency assets were being marked down to 75 per cent of their original value.
The exchange added that the hackers were unsuccessful in stealing more because much of its assets were stored in a so-called cold wallet: a secure store that holds currency that is not being traded.
Jon Geater, CTO of Thales eSecurity, told us: “A hack of this scale makes it painstakingly clear that bitcoin security is far from perfect. Although the protocol and the system are theoretically very robust, over £600m worth of bitcoin has either been lost or stolen since the creation of the cryptocurrency…
“The standard mantra that bitcoin is inherently secure only extends to the transaction network itself, but the problems of security management have not gone away; they’ve just been pushed further out to the edges.”
Bitcoin, while offering the potential for high returns, is not regulated like the banking industry. Victims of cyber attacks have almost no legal recourse to claim compensation in these cases, said Ilia Kolochenko, CEO of High-Tech Bridge. He added, “Bitcoin unfortunately remains vulnerable because of the surrounding intertwined technologies such as exchanges. While BTC price goes up, we should expect continuous growth of cybercrime targeting Bitcoin, its users, related platforms and exchanges.”