Hackers Steal $35M from Youbit, Forcing It Out of Business

Seoul-based crypto exchange Youbit said it was filing for bankruptcy last month following a hack in which cyber-thieves stole over $35M, representing almost a fifth of its clients’ holdings. It was the second hack of 2017. In April, hackers managed to take 38 billion won ($35M) in digital currencies.

Youbit allows customers to trade bitcoin and other cryptocurrencies. It’s a comparatively small player in the market compared to Bithumb, a much larger crpto-exchange in South Korea. Youbit said that its customers would immediately get back approximately three-quarters of the value of the digital coins it had in the exchange’s accounts. The rest would follow after bankruptcy proceedings. The hit exchange’s owner, Yapian, said that thanks to cyber insurance and a potential sale of operating rights, its losses could be under 17 per cent.

Tim Wellsmore, Director of Threat Intelligence at FireEye, told CNN Tech that bitcoin exchanges had been too slow to respond to potential cyber threats. “As the prices of bitcoin and similar virtual currencies continue to appreciate, we expect greater interest from attackers seeking to steal it,” he said.

South Korea’s Internet and Security agency said it hadn’t yet determined who was responsible, but was working closely with Youbit on an investigation.

Suspicion quickly fell on North Korea. Last year, South Korean police accused North Korean hackers of attempting to hack at least four different crypto-exchanges in South Korea. According to the Australian Strategic Policy Institute, the North Korean regime employs around 1,700 hackers, backed by over 5,000 support staff. North Korea has continuously denied any involvement in international cyberattacks.

South Korea has quickly become a center point for bitcoin activity; with approximately 20% of its daily trading taking place in the cryptocurrency space. Traders can end up paying a premium of 15-20 per cent on bitcoin prices there in comparison to prices elsewhere.

Authorities there are beginning to worry about the impact of a potential crash with cryptocurrency prices soaring, and the government announced in November that it was forming a special task force to study the “cryptocurrency problem”. The South Korean Prime Minister recently warned that cryptocurrencies might corrupt the nation’s youth.

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