Billions of Dollars of Cryptocurrency was just Stolen by Hackers
It seems like cryptocurrency just can’t get a break. The digital currency has experienced a number of ups and downs since its sudden soaring popularity when it got news media attention eighteen months ago. Being the victim of cybercrime is just another punch in a long list of hits from hacker groups, foreign governments, business leaders, and more.
In a statement made earlier Monday, the South Korean coin exchange Coinrail announced it had been targeted by a group of cyberthieves who made off with an estimated 30% of the company’s virtual currencies. As an online cryptocurrency exchange, Coinrail handles the trading and exchanging of the digital currency for millions of users, handling potentially billions of dollars at a time.
The company also said in the statement that it has temporarily suspended trading and was fully cooperating with police investigators to hunt down the stolen funds. Although Coinrail did not disclose the sum of the tokens stolen—in order to safeguard the sensitivity of the investigation—the value of Bitcoin experienced a 7% slump after the announcement.
“Two-thirds of the coins confirmed to have been leaked are covered by freezing / recalling through consultation with each coach and related exchanges. The remaining one-third of coins are being investigated with investigators, relevant exchanges, and coin developers,” Coinrail said.
The cybercrime comes as a shock to the cryptocurrency community because, while South Korea has created a bustling virtual currency market over the last year, Coinrail is considered a smaller, lesser-known trading platform.
The attack on Coinrail rippled (apologies for the pun) across other cryptocurrency exchanges. In addition to the 7% slump in Bitcoin, other virtual tokens also saw their values plunge. Among dozens of other tokens, notable currency Ethereum saw a significant price drop. According to a report from Coinmarketcap.com, in the seven hours since the announcement of the attack was first made, nearly $30 billion in cryptocurrency wealth had vanished.
"Investors have been increasingly worried about cybersecurity issues," said Adrian Lai, founding partner at Hong Kong-based investment firm Orichal Partners. "At this stage, obviously, the standard is not high enough."
Unfortunately, the hack on Coinrail has been just one of many high-profile cyber crimes against cryptocurrency in the past several years.
Perhaps the most notable one is the 2013 Mt. Gox Hack which saw more than 850,000 bitcoins belonging to customers stolen or missing. At the time, that amount valued at more than $450 million—when accounting for inflation of today, that is a truly astronomical amount of money. Investigators from the Tokyo security company WizSec would eventually conclude that Mt.Gox had been the target of a long, procedural hack that gradually stole bitcoins from the company over several years. In 2014, Mt.Gox closed its doors and filed for bankruptcy.
Although more steps need to be taken to secure digital assets and safeguard the personal information of the customers using these online coin exchanges, it’s unclear what move needs to be made next. The volatility of the cryptocurrency market and the apparent trepidation governments and international businesses have regarding bitcoin and another tokens throttles cryptocurrency from becoming more widely used.
It the meantime, unless you’re willing to take the risk, it might be best to stay conservative with your money be vigilant on what cryptocurrencies you are investing in.