Bitcoin price plunges after cryptocurrency exchange is hacked
There has been a sharp drop in the price of bitcoin and other virtual currencies after South Korean cryptocurrency exchange Coinrail was hacked over the weekend.
A tweet from Coinrail confirming the cyber-attack sent the price of bitcoin tumbling 10% on Sunday to two-month lows.
The world’s best-known cryptocurrency lost $500 (£372) in an hour, dropping to $6,627 on the Luxembourg exchange Bitstamp, while most other digital currencies also recorded large losses.
Cryptocurrencies have a mysterious allure – but are they just a fad?
Robert Shiller
Read more
The latest attack highlights the lack of security and weak regulation of global cryptocurrency markets.
Coinrail later said in a statement on its website that its system was hit by “cyber intrusion” on Sunday, causing a loss for about 30% of the coins traded on the exchange. It did not quantify the value, but the local Yonhap news agency estimated that about 40bn won (£27.8m) worth of virtual coins was stolen.
Coinrail said: “Seventy percent of total coin and token reserves have been confirmed to be safely stored and moved to a cold wallet [not connected to the internet]. Two-thirds of stolen cryptocurrencies were withdrawn or frozen in partnership with related exchanges and coin companies. For the rest, we are looking into it with an investigative agency, related exchanges and coin developers.”
Police have begun an investigation, according to the Korea Herald, which cited a spokesperson as saying: “We secured the access history of Coinrail servers and we are in the process of analysing them.”
Bitcoin was trading at about $6,750 on Monday afternoon – down from an all-time peak of almost $20,000 in the week before Christmas. In February, it fell to $5,900.
Bitcoin price chart
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South Korea is one of the world’s major cryptocurrency trading centres, and is home to one of the busiest virtual coin exchanges, Bithumb.
There have been a series of thefts from cryptocurrency exchanges in recent months. Japan’s Coincheck was hacked in January, with more than $500m-worth of digital currency stolen. It started reimbursing customers in March, but faces two class-action lawsuits. In December, the South Korean exchange Youbit shut down and filed for bankruptcy after being hacked twice.
Naeem Aslam at online trading platform ThinkMarkets said: “The question is: is there any limit to these hacks? After every few months, we are seeing the same pattern emerging. This is the result of loose regulatory control and regulators must step in to protect the consumers. Anyone who wants to do anything with exchanges should be forced to adopt high-grade security and regular security upgrades.”
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The Wall Street Journal (£) reported on Friday that US regulators were investigating potential price manipulation at four major cryptocurrency exchanges. The investigation comes six months after CME Group launched bitcoin futures. Coinbase, Bitstamp, itBit and Kraken have been asked to share trading data related to the futures contracts.
Analysts said bitcoin volatility was fading, after the price increased threefold between mid-November and mid-December. David Jones, the chief market strategist at trading platform Capital.com, said this was driven by increased publicity as bitcoin went from being a niche IT interest to becoming mainstream, but added that the hype has now gone.
He noted that Facebook and Google had banned cryptocurrency adverts. “Plenty of latecomers to the cryptocurrency rally have had their fingers burnt, have taken their losses (or are still sitting on them) and have vowed never to return,” Jones said. “Activity amongst the wider public has slowed. Arguably, the introduction of a listed futures contract for bitcoin has also calmed the wilder market moves.”
• The subheading of this article was amended on 12 June 2018 because an earlier version referred to Coincheck losing about £28m of virtual currency. That loss was meant to refer to Coinrail.
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A tweet from Coinrail confirming the cyber-attack sent the price of bitcoin tumbling 10% on Sunday to two-month lows.
The world’s best-known cryptocurrency lost $500 (£372) in an hour, dropping to $6,627 on the Luxembourg exchange Bitstamp, while most other digital currencies also recorded large losses.
Cryptocurrencies have a mysterious allure – but are they just a fad?
Robert Shiller
Read more
The latest attack highlights the lack of security and weak regulation of global cryptocurrency markets.
Coinrail later said in a statement on its website that its system was hit by “cyber intrusion” on Sunday, causing a loss for about 30% of the coins traded on the exchange. It did not quantify the value, but the local Yonhap news agency estimated that about 40bn won (£27.8m) worth of virtual coins was stolen.
Coinrail said: “Seventy percent of total coin and token reserves have been confirmed to be safely stored and moved to a cold wallet [not connected to the internet]. Two-thirds of stolen cryptocurrencies were withdrawn or frozen in partnership with related exchanges and coin companies. For the rest, we are looking into it with an investigative agency, related exchanges and coin developers.”
Police have begun an investigation, according to the Korea Herald, which cited a spokesperson as saying: “We secured the access history of Coinrail servers and we are in the process of analysing them.”
Bitcoin was trading at about $6,750 on Monday afternoon – down from an all-time peak of almost $20,000 in the week before Christmas. In February, it fell to $5,900.
Bitcoin price chart
Advertisement
South Korea is one of the world’s major cryptocurrency trading centres, and is home to one of the busiest virtual coin exchanges, Bithumb.
There have been a series of thefts from cryptocurrency exchanges in recent months. Japan’s Coincheck was hacked in January, with more than $500m-worth of digital currency stolen. It started reimbursing customers in March, but faces two class-action lawsuits. In December, the South Korean exchange Youbit shut down and filed for bankruptcy after being hacked twice.
Naeem Aslam at online trading platform ThinkMarkets said: “The question is: is there any limit to these hacks? After every few months, we are seeing the same pattern emerging. This is the result of loose regulatory control and regulators must step in to protect the consumers. Anyone who wants to do anything with exchanges should be forced to adopt high-grade security and regular security upgrades.”
Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk
The Wall Street Journal (£) reported on Friday that US regulators were investigating potential price manipulation at four major cryptocurrency exchanges. The investigation comes six months after CME Group launched bitcoin futures. Coinbase, Bitstamp, itBit and Kraken have been asked to share trading data related to the futures contracts.
Analysts said bitcoin volatility was fading, after the price increased threefold between mid-November and mid-December. David Jones, the chief market strategist at trading platform Capital.com, said this was driven by increased publicity as bitcoin went from being a niche IT interest to becoming mainstream, but added that the hype has now gone.
He noted that Facebook and Google had banned cryptocurrency adverts. “Plenty of latecomers to the cryptocurrency rally have had their fingers burnt, have taken their losses (or are still sitting on them) and have vowed never to return,” Jones said. “Activity amongst the wider public has slowed. Arguably, the introduction of a listed futures contract for bitcoin has also calmed the wilder market moves.”
• The subheading of this article was amended on 12 June 2018 because an earlier version referred to Coincheck losing about £28m of virtual currency. That loss was meant to refer to Coinrail.
Since you’re here…
… we have a small favour to ask. More people are reading the Guardian than ever, but advertising revenues across the media are falling fast. And unlike many news organisations, we haven’t put up a paywall – we want to keep our journalism as open as we can. So you can see why we need to ask for your help.
The Guardian is editorially independent. So we set our own agenda. Our journalism is free from commercial bias. It isn’t influenced by billionaire owners, politicians or shareholders. No one edits our Editor. No one steers our opinion. This means we can give a voice to the voiceless. It lets us challenge the powerful - and hold them to account. And at a time when factual, honest reporting is critical, it’s what sets us apart from so many others.
The Guardian’s long term sustainability relies on the support that we receive directly from our readers. And we would like to thank the hundreds of thousands who are helping to secure our future. But we cannot stop here. As more of you offer your ongoing support, we can keep investing in quality investigative journalism and analysis. We can remain a strong, progressive force that is open to all.
If everyone who reads our reporting, who likes it, helps to support it, our future would be much more secure. For as little as $1, you can support the Guardian – and it only takes a minute. Thank you.
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