South Korean crypto exchange loses $32m in heist

Crypto-currency exchange Bithumb is the sixth busiest in the world.
Crypto-currency exchange Bithumb is the sixth busiest in the world.

South Korean crypto-currency exchange Bithumb said 35 billion won ($31.5 million) worth of virtual coins were stolen by hackers, the second local exchange targeted in just over a week as cyber thieves exposed the high risks of trading the digital asset.

Bithumb said in a notice on its Web site today that it had stopped all trading after ascertaining "some crypto-currencies worth about 35 billion won were seized between late yesterday and early morning today".

The exchange, the sixth busiest in the world, according to Coinmarketcap.com, said it had stored "all clients' assets in safe cold wallets", which operate on platforms not directly connected to the Internet.

It added the company would fully compensate customers.

The Bithumb theft highlights the security risks and the weak regulation of global crypto-currency markets. Global policymakers have warned investors to be cautious in trading the digital currency given the lack of broad regulatory oversight.

In Ho, a professor at Korea University's Blockchain Research Institute, said the stolen coins were most likely to be from the more insecure 'hot wallets'.

"Since coins in the cold wallets are not at all wired to the Internet, it would have been impossible for hackers to steal those in cold wallets unless they physically broke in," said In, a blockchain expert at the research centre.

Bithumb did not immediately respond to Reuters' request for comments, and its statement did not say whether the stolen coins were stored in its 'hot wallets'.

Mun Chong-hyun, chief analyst at ESTsecurity, said digital coins would continue to be juicy targets for hackers around the world.

"No security measures or regulations can 100% guarantee safety of virtual coins. It is held anonymously and in lightly-secured systems, which makes them an irresistible target," Mun said.

On the Luxembourg-based Bitstamp, Bitcoin was down 1.8% at $6 612.92 by 0351 GMT, extending losses as a series of intrusions on crypto-currency exchanges in recent weeks sparked concerns over security.

It has fallen roughly 70% from its all-time peak hit around mid-December 2017.

On 11 June, another South Korean crypto-currency exchange Coinrail said it was hacked. The cyber attacks come after a high-profile theft of over half a billion dollars worth of digital currency at Japan's exchange Coincheck earlier this year.

In January, South Korea banned the use of anonymous bank accounts for virtual coin trading to stop crypto-currencies being used in money laundering and other crimes. But the government said it does not intend to go as far as shutting down domestic exchanges.

Bithumb trades more than 37 different virtual coins, according to Coinmarketcap.com.

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