South Korean exchange Youbit, owned by a company named Yapian, stopped trading of cryptocurrencies on its platform and filed for bankruptcy on Tuesday after a hacker stole 17% of its cryptocurrency holdings. This is the second hack the exchange has suffered in eight months.
Earlier in April, Youbit, formerly known as Yapizon, had 4000 bitcoins stolen from its coffers. South Korea's Internet and Security Agency (Kisa), tasked with investigating cyber crimes, has started an inquiry into the security breach to determine how thieves gained access to the exchange's storage.
In a statement on its website, Youbit said it would stop all deposits and withdrawals after filing for bankruptcy but would allow its users to withdraw approximately 75% of their assets. Youbit promises to do its best “to minimize the loss of our members by 17% , through various methods such as cyber comprehensive insurance (3 billion) and selling the operating rights of the company.”
Youbit said it had made “every effort” to improve its security and hire more security staff following the hack in April, however it noted that despite the loss ratio being low compared to the April hack, the management had decided to proceed with filing a bankruptcy.
Details of the refund process will be confirmed in an “additional notice”, it added. The apologetic statement was signed by all employees at Youbit.
According to Kisa, close to 8 billion won worth of cryptocurrencies have been stolen in recent attacks on multiple Korean exchanges. Many of the recent cyber attacks have been ascribed to North Korea. Researchers have found malicious codes used in these attacks to be virtually identical to previous attacks orchestrated by North Korea.
North Korea Seeking Refuge in Bitcoin?
There are fears that North Korea's reclusive and totalitarian regime is now focused on amassing a significant tranche of bitcoins following UN economic sanctions against the country in September. Although ostracized by the sanctions, it hasn't stopped the country from testing nuclear missiles.
Reason? It can mine and hack exchanges for bitcoins. According to Internet threat intelligence firm, Recorded Future, North Korea began mining bitcoins in May. Recent security breaches across exchanges have led to fears that it is now also getting good at hacking.
Visiting research fellow at Jeju Peace Institute in South Korea, Steve Kim says the currency is tailor-made for a country which is isolated from the rest of the world,
“The cryptocurrency is the ideal form of money for North Korea because it can be moved quickly and anonymously across borders. If there is way to exploit crypto-currencies, North Korea will figure it out and move aggressively to do so. Given their advanced cyber capability and the need for new revenue source in the face of growing sanctions, North Korean cyber attacks to acquire crypto-currencies will occur with increasing frequency in the future.”
For the sake of bitcoiners all around the world, one can only hope that North Korea does not figure out how to hack South Korean exchange Bithumb. Bithumb accounts for 75% of all trading volume in South Korea and more than 10% of global trading volume.