Crypto exchange hack fuels bitcoin slump

Bitcoin has dropped 11 per cent since 5pm, New York time, last Friday and was trading at US$6,784.04 as of 10.21am on June 11, 2018.
Bitcoin has dropped 11 per cent since 5pm, New York time, last Friday and was trading at US$6,784.04 as of 10.21am on June 11, 2018.PHOTO: REUTERS

SEOUL • A cryptocurrency exchange hack in South Korea jolted holders of digital assets, fuelling a US$46 billion (S$61 billion) rout and extending this year's bitcoin slump to more than 50 per cent.

The hack brought an abrupt end to two weeks of calm for the biggest virtual currency and reignited concerns about the security of lightly regulated crypto exchanges. The venues have come under growing scrutiny in South Korea, the United States and other large economies in recent months, amid a range of issues including theft, market manipulation and money laundering.

Bitcoin has dropped 11 per cent since 5pm, New York time, last Friday and was trading at US$6,784.04 as of 10.21am in Hong Kong yesterday, bringing its year-to-date loss to 53 per cent.

Most other major virtual currencies also slumped, sending the market value of digital assets tracked by Coinmarketcap.com to a nearly two-month low of US$294 billion. At the height of the global crypto-mania in early January, they were worth about US$830 billion.

Enthusiasm for virtual currencies has waned partly due to a string of cyberheists, including the nearly US$500 million theft from Japanese exchange Coincheck in late January.

While the latest hacking target - a South Korean venue called Coinrail - is much smaller, the news triggered knee-jerk selling by investors, according to Mr Stephen Innes, head of Asia-Pacific trading at Oanda in Singapore. "This is 'If it can happen to A, it can happen to B and it can happen to C', then people panic because someone is selling," he said.

Coinrail said in a statement on its website that some of the exchange's digital currency appear to have been stolen by hackers, but it did not quantify the value. Coinrail said only that it was cooperating with investigators and other exchanges to try and track down the perpetrators and recover the assets.

Enthusiasm for virtual currencies has waned partly due to a string of cyberheists, including the nearly US$500 million theft from Japanese exchange Coincheck in late January. While the latest hacking target - a South Korean venue called Coinrail - is much smaller, the news triggered knee-jerk selling by investors, according to Mr Stephen Innes, head of Asia-Pacific trading at Oanda in Singapore.

The exchange said it has managed to freeze all exposed NPXS, NPER and ATX coins, and that other cryptocurrencies are now being kept in a cold wallet, which is not connected to the Internet and is less vulnerable to theft. The statement is the only content available on the exchange's home page.

Coinrail trades more than 50 different cryptocurrencies and was the world's 98th most active venue, with a 24-hour volume of about US$2.65 million, according to data compiled by Coinmarketcap.com.

Some Asia-listed stocks with exposure to digital currencies fell yesterday. South Korea's Omnitel and Vidente both retreated at least 4 per cent, while Japan's Remixpoint slumped about 6 per cent.

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A version of this article appeared in the print edition of The Straits Times on June 12, 2018, with the headline 'Crypto exchange hack fuels bitcoin slump'. Print Edition | Subscribe