Future Tense

Cryptocurrencies Plunged by Billions of Dollars Because a Minor Exchange Got Hacked

South Korean exchange Coinrail reported that 30 percent of its cryptocurrency was lost in a hack.
South Korean exchange Coinrail reported that 30 percent of its cryptocurrency was lost in a hack. Jack Taylor/Getty Images

Coinrail, a relatively obscure cryptocurrency exchange in South Korea, announced on Monday that hackers had made off with 30 percent of its digital currency over the weekend.

The price of bitcoin subsequently dropped by 7 percent to a two-month low of $6,750, and other cryptocurrencies like ethereum saw similar slumps. All in all, almost $30 billion in cryptocurrency wealth was lost in the seven hours after Coinrail’s announcement.

Coinrail has not disclosed the total value of its losses, though a South Korean news outlet estimated that the sum was about 40 billion won, or roughly $37 million. Coinrail did report that the cryptocurrency the hackers stole was not bitcoin. The exchange has suspended trading and is currently working with local law enforcement to locate the stolen cryptocurrency.

The faulty security of cryptocurrency exchanges has long been a major concern of critics of the industry. Thieves break into users’ accounts and transfer funds to another wallet or redirect funds to a fake address. Just this year, the Japanese exchange Coincheck lost more than $500 million due to a hack, while the South Korean exchange Youbit had to file for bankruptcy after being hit by two hacks.

Other hacks in cryptocurrency history include the infamous 2014 breach of Japan’s Mt. Gox, a major exchange at the time. Mt. Gox eventually had to shut down after hackers got their hands on $460 million, while another $27.4 million simply disappeared for unknown reasons. A couple years later, in 2016, another major exchange called Bitfinex located in Hong Kong would report that a total of $72 million had been purloined from users’ wallets.

Bitcoin and other cryptocurrencies have been in a slump since their values skyrocketed late last year. Since its high of almost $20,000 in December, bitcoin’s price has hovered about $10,000 for much of 2018. This decline has been attributed partly to increasing regulatory scrutiny of the industry from governments around the world.