Bitcoin Plunges Following Coinrail Hack

It’s been a rough start to the week for cryptocurrencies like bitcoin as Coinrail, a cryptocurrency exchange based in South Korea, announced that it had been hacked on Sunday (June 10).

According to the exchange’s website, roughly 30 percent of the exchange’s altcoins were compromised–meaning digital currencies that aren’t bitcoin or ethereum–totaling a loss of roughly US$40 million, Coindesk reported.

Coinrail has a daily trading volume of roughly US$2.48 million and is one of the smaller cryptocurrency exchanges, according to Coinmarketcap.com. That said, Sunday’s hack resulted in crypto-heavy mammoths like bitcoin tumbling from a high on Saturday (June 9) of $7,675.77 to as low as $6,647.33 on Sunday, which is roughly a 12 percent decrease over that period and its lowest levels since April 9.

The exchange said on Sunday that “there was a system check due to the hacking attempt,” and that compromised tokens include: NPXS, ATX and NPER.

“There has been a cyber intrusion in our system,” the exchange said in a tweet. “We’re confirming it and some coins (Pundi X, NPXS) are confirmed.”

해킹공격시도로 인한 시스템 점검중입니다. 일부코인(펀디엑스,NPXS)이 확인되었으며 추가적인 코인피해가 있는지 여부를 확인중입니다. 추후 자세한 사항은 재공지하겠습니다 / There has been an cyber intrusion in our system. We’re confirming it and some coins(Pundi X, NPXS) are confirmed.

— coinrail (@Coinrail_Korea) June 10, 2018

Pundi X, the creators of the NPXS token, said in a blog post on Sunday the amount of NPXS tokens stolen total three percent of its current supply.

“There was an unauthorized suspicious trading activity involving 2,619,542,080 NPXS tokens transferred to IDEX,” Pundi X said.

Coinrail in its statement said that 70 percent of coins were confirmed to be “safely stored” and moved to a cold wallet not accessible through the internet. The exchange added that transactions and withdrawals will resume “after stabilizing the service.”

Reuters reported on Sunday that global policy makers have warned those interested in trading digital currencies due to the “lack of broad regulatory oversight” and, in particular, smaller exchanges such as Coinrail.

“Coinrail is not a member of the group that promotes self regulations to enhance security. It is a minor player in the market and I can see how such small exchanges with lower standards on security level can be exposed to more risks,”Kim Jin-Hwa, a Korea Blockchain Industry Association representative told Reuters.

According to the publication, just four of South Korea’s biggest exchanges are “subject to the Information Security Management System certification (ISMS) requirement,” which certifies the protection of personal information at organizations with average daily visitors of over one million.

“Coinrail, as of June this year, hasn’t been certified with the ISMS, as it isn’t mandatory (for the organization to do so),” Reuters quoted the regulator stating.

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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.