South Korean crypto exchange files for bankruptcy after hack

South Korean cryptocurrency dealer Youbit will close and enter bankruptcy proceedings after a cyberattack. About 17 per cent of total assets were lost.
South Korean cryptocurrency dealer Youbit will close and enter bankruptcy proceedings after a cyberattack. About 17 per cent of total assets were lost.PHOTO: BLOOMBERG

SEOUL (BLOOMBERG, REUTERS) - Cryptocurrency dealer Youbit became a casualty of hackers.

The Seoul-based exchange will close and enter bankruptcy proceedings after a cyberattack at about 4.35 am local time, its owner, Yapian, said Tuesday in a statement. About 17 per cent of total assets were lost.

It came eight months after nearly 4,000 bitcoin - then valued at 5.5 billion won (S$6.7 million) and nearly 40 per cent of the exchange's total assets - were stolen in a cyber attack blamed on North Korea.

Yapian said it encouraged clients to keep their tokens in a safer form after April's attack.

It is the first time that a South Korean cryptocurrency exchange has gone bankrupt.

South Korea has emerged as a sort of ground zero for the global crypto-mania. So many Koreans have embraced bitcoin that the prime minister recently warned that cryptocurrencies might corrupt the nation's youth.

The craze has spread so far that, in Korea, bitcoin is trading at a premium over prevailing international rates.

"There were no additional losses, as other coins were in the cold wallet," Yapian said. While it suspended coin and cash deposit and withdrawals as of 2 pm local time, it said about 75 per cent of assets could be safely withdrawn by clients.

South Korea finance ministry official Ko Kwanghee said in telephone interview on Wednesday that the government is not taking any "countermeasures," noting regulators' warnings over such speculation.

A hot wallet is an internet-connected account that potentially can be accessed by hackers. That's why many people keep their cryptocurrency holdings in cold wallets - typically, physical devices disconnected from the web that can be plugged into a computer when needed.

Researchers in South Korea, which hosts some of the world's busiest virtual currency exchanges and accounts for 15 to 25 per cent of world bitcoin trading on any given day, say attacks this year on exchanges like Bithumb, Coinis, and

Youbit have the digital fingerprints of hackers from North Korea.

The researchers' findings have not been independently verified. North Korea has rejected accusations that it has been involved in hacking.

A spokesman for South Korea's Unification Ministry, which handles North Korean affairs, said on Monday the government was considering "countermeasures", including more sanctions, over the cyber attacks.