Cryptocurrencies dropped after the second South Korean exchange in as many weeks said it was the victim of a theft, renewing concerns about the safety of digital-asset trading venues.
Bithumb, ranked No. 7 globally by traded value on Coinmarketcap.com, yesterday said that hackers stole about 35 billion won (US$31.6 million) and that Ripple was among the coins taken.
The exchange halted cryptocurrency deposits and withdrawals, said it would compensate victims and moved investor assets to a so-called cold wallet, which is disconnected from the Internet and less vulnerable to theft.
Photo: Bloomberg
Bitcoin, the largest cryptocurrency, dropped as much as 2 percent and was trading at US$6,616 as of 8:25am in London, bringing this year’s decline to 54 percent, according to Bloomberg composite pricing.
Ripple, Ethereum and Litecoin also retreated, along with some Asia-listed stocks with exposure to digital currencies.
Enthusiasm for virtual currencies has waned this year partly due to a string of heists, including the nearly US$500 million theft from Japanese exchange Coincheck Inc in late January.
South Korean venue Coinrail last week said that some of the exchange’s digital coins appeared to have been stolen, although it did not disclose the amount.
While news of the latest theft has weighed on sentiment, the reaction has been relatively subdued, said Ryan Rabaglia, head trader at cryptocurrency dealing firm Octagon Strategy Ltd in Hong Kong.
“The market has sort of become a bit more battle-hardened. It can weather the storm on these negative reports,” he said.
The crypto-mania that spread worldwide last year was particularly intense in South Korea, with Bitcoin prices at one point climbing to a 50 percent premium over those in the US.
The speculative fervor has since cooled amid a government crackdown, but South Korean exchanges are still among the world’s most active.
South Korean policymakers are debating comprehensive regulations covering cryptocurrencies, with proposals ranging from shutting down local exchanges to allowing them to operate under increased supervision.
Bithumb said that it reported the theft to the Korea Internet & Security Agency and that officials there are investigating.
The South Korean hacks show “how ill-prepared a lot of the exchanges still are across large markets,” said Vijay Ayyar, the Singapore-based head of business development at Luno, a cryptocurrency exchange.
“The overall market is seeing a lot of regulatory action and incidents like these will only hasten the process,” he added.
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