In the latest line of cryptocurrency heists, Coinrail, a South Korean cryptocurrency exchange, has suffered and lost nearly 30% of its cryptocurrency reserves. The exchange has not yet revealed an estimate of the loss, but Yonhap News, a local news outlet, reported the fund amount lost was approximately $37.2 million. Currently, the Korean National Police is investigating the case.
The company also said that 70% of the total token and coin reserve have been safely stored and moved to a cold wallet (not connected to the Internet) and confirmed, while 2/3rd of the stolen cryptocurrencies have been frozen in partnership with related coin companies and exchanges or withdrawn.
Coinrail and the cyber intrusion
Coinrail is cryptocurrency exchange and was ranked at #99 on the website of CoinMarketCap. While the exchange mainly dealt with Ripple, Ethereum, and Bitcoin, the company was popular because it also dealt with ICO tokens and smaller coins. Nearly 2/5th of the company’s daily trade volume was in NPXS tokens, which explains why the hacker could get his/her hand on so many of these tokens.
As soon as the intrusion was detected, Coinrail put its portals in maintenance mode. Still, the hacker made off with ICO tokens of Aston (ATX), NPER, and Pundi X (NPXS) in large amounts that were stored in the exchange’s servers.
A tweet from Coinrail confirmed about the cyber-attack, which also sent the price of bitcoin up to 10% on Sunday to two-month lows. Trading more than 50 cryptocurrencies and being one of the global active venues, Coinrail last traded over $2.48 million in 24 hours before its website was hit by an unknown cyber intrusion. Share prices of the hacked coins fell 10% early Monday following the hack.
Bitcoin has dropped about 12% since 5 pm NY time on Friday and was trading at $6,756, thereby bringing its decline in 2018 by 53%. At the same time, other virtual currencies also retreated, subsequently sending the market value of digital assets to an almost two-month low of $298 billion. While at its greatest peak in January 2018, the market value was worth about $830 billion.
Why did Korean crypto-market get hacked?
This heist at Coinrail highlighted the weak regulation and security risks of the global digital coins market. South Korea is one of the leading centers for cryptocurrency trading, while also being home to Bithumb, a heavily trafficked cryptocurrency exchange.
There have been several thefts of cryptocurrencies exchanges in the past few months that has jolted regulators and investors alike. Coincheck, a crypto-exchange firm in Japan, was hacked in January (2018), with approximately $500 million worth of digital currency stolen. An Indian cryptocurrency exchange was also hacked and suffered a loss of $3.5 million, forcing it shut its doors.
The previous year, Youbit, another South Korean exchange, shut down after it went bankrupt following being hacked twice in a row in a similar fashion. Another exchange called NiceHast suffered a loss of $68 million worth of coins. Several comparative research has suggested that a total amount of cryptocurrency hacking and theft has already crossed $1.1 billion marks in 2018 alone.