South Korean Coinrail Hack Caused Drop of Values for Cryptocurrencies

Cryptocurrencies Lose $46 Billion After South Korean Bourse Hack

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  • Coinrail exchange hack renewed security concerns among investors.
  • Most investors took to selloff, which caused a drop in the values of most cryptocurrencies.

South Korea: According to a recent report, Coinrail – a South Korean-based cryptocurrency exchange – is the latest victim of the hacking attack. The exchange hack triggered a security alert among investors, which fueled a $46 bln cryptocurrencies selloff. This could explain the reason for the drop in the values of cryptocurrencies with Bitcoin falling as low as 11% and extending its 2018 slump to more than 50%.

The exchange hack caused a sudden stop to Bitcoin’s 2 weeks of calm and rekindled investors’ security concerns over unregulated and poorly regulated cryptocurrency exchanges. Since 5 pm NY time on Friday 8th June, Bitcoin had fallen by about 11% and currently trading at about $6,781 as at press time. This brought a loss of more than 50% to Bitcoin in this year alone.

Aside of bitcoin, other major cryptocurrencies also dropped in value, causing a drop in the value of cryptocurrencies total market value to about a 2-month low of $294 bln, which were worth almost $830 bln in early January.

Interests in cryptocurrencies have declined to an extent as a result of the string of cyber thefts, which include the Coincheck’s $500 million worth of NEM hack in January. Stephen Innes of the Singapore-based Oanda Corporation stated that though the Coinrail exchange hack was much smaller that Coincheck’s, it caused an immediate selloff by investors. Stephen said:

“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.”

He added that the drop in value was possibly worsened by low market liquidity during the weekend:

“The markets are so thinly traded, primarily by retail accounts, that these guys can get really scared out of positions,” he said. “It actually doesn’t take a lot of money to move the market significantly.”

Coinrail released an announcement on its website that some of its cryptocurrency seems to have been lost to hacking activities, however, the exchange did not reveal the amount of the stolen coins. Coinrail also stated that it safely stores 70% of its digital currencies in a cold wallet, which is less vulnerable to theft. The exchange mentioned that about two-thirds of the stolen cryptocurrencies – identified as ATX, NPER, and NPXS – have been recollected or frozen, while the remaining one-third is being currently under examination.

Before the hack, Coinrail was among the top 100 most active exchanges globally and traded more than 50 digital currencies, with a 24-hour vol. of more than $2.65 mln, according to Coinmarketcap.

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