Cryptocurrencies lose US$46b after South Korean bourse hack

Cryptocurrencies lose US$46b after a South Korean exchange hack, reigniting security concerns about lightly regulated crypto exchanges.
Cryptocurrencies lose US$46b after a South Korean exchange hack, reigniting security concerns about lightly regulated crypto exchanges. PHOTO: REUTERS

SEOUL (BLOOMBERG) - A cryptocurrency exchange hack in South Korea jolted holders of digital assets, fuelling a US$46 billion (S$61.4 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 US and other large economies in recent months amid a range of issues including thefts, market manipulation and money laundering.

Bitcoin has dropped 11 per cent since 5pm New York time on Friday and was trading at US$6,784.04 as of 10:21am in Hong Kong on Monday (June 11), 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 cyber heists, including the nearly US$500 million theft from Japanese exchange Coincheck Inc 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 Stephen Innes, head of Asia Pacific trading at Oanda Corp 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,' Innes said.

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

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 isn't connected to the Internet and is less vulnerable to theft. The statement is the only content available on the exchange's homepage. 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 on Monday. South Korea's Omnitel Inc and Vidente Co both retreated at least 4 per cent, while Japan's Remixpoint Inc slumped about 6 per cent.