On the 27th of November 2019, the South Korean cryptocurrency exchange, Upbit, released a statement that they had lost US$50million in a hack. The company stated that the security breach led to the withdrawal of a large amount of ether (ETH).
The statement was released by Dunamu’s CEO, Lee Seok-woo, which is the exchange’s operator. It stated that approximately 342, 000 ETH was moved yesterday at around 13:00 pm from their platform’s ‘hot wallet’ to an unknown wallet. Despite this hack, the firm assured that their clients’ funds were not impacted in any way. In addition, the company confirmed that they would cover the loss from Upbit’s funds.
Whale Alert, which is a well-known service in tracking major transactions in cryptocurrencies, also noted the incident on Twitter.
Safety Measures Taken
Upbit stated that due to the incident, they had moved all their virtual coins to cold wallets for safety. Cold-storage is well-known method used to store cryptocurrencies offline to decrease the chances of anyone stealing the funds. Cold storage is usually a long-term storage method. In comparison, hot wallets are typically connected directly to the Internet and are used to carry any digital currency transactions.
Despite the company stating that their clients’ funds are safe, the recent incident has affected Upbit clients indirectly. The cryptocurrency exchange announced that all their services would be suspended for the next two weeks, in order to ensure that are able to protect all virtual funds on their platform. As a result, this means that their clients will not be able to make any deposits or withdraw funds for that period of time. This suspension is evidently going to impact Upbit clients who would like to carry out transactions. While two weeks is a long time for someone not to have access to their funds, it is a necessary move by Upbit to maintain the safety of all their client’s virtual funds.
At this stage, the Upbit exchange company has not provided any details about the hack and how it was executed. More details are, however, expected to surface in the future.
Is the Crypto Space in Trouble?
Interestingly, the hack comes days after Bitcoin has experienced a significant drop over the last few weeks. This came after Chinese President, Xi Jinping, expressed his doubts and concerns over illegally operating cryptocurrencies exchanges. His comments impacted the cryptocurrency market by a huge magnitude.
Upbit is a digital currency exchange company that was founded two years ago. The company grew quickly and became the largest cryptocurrency exchange in South Korea. Interestingly, only a month ago, the company’s users were a target in a phishing operation in which a fake giveaway was used to scam its users. A few weeks earlier, another South Korean exchange company, Bithumb, lost more than US$20 million worth of cryptocurrencies in what was suspected to be an inside job.
Over the last few years, many cyberattacks involving crypto companies have been witnessed. These attacks are often focused on the companies that provide the infrastructure for users and virtual currencies. Some of the incidents have also involved high-profile theft of clients’ digital currencies. In a research done by ESET recently, it was found that there are also several mobile apps in the market that have been targeting people and stealing their cryptocurrency assets.
It is clearly evident that the security of cryptocurrency exchanges needs to be reassessed so that people can have peace of mind when it comes to storing their cryptocurrencies with these exchanges.