A recent hacking incident that took place against the South Korean cryptocurrency exchange, Coinrail, has sent the price of the popular digital currency Bitcoin plummeting to below $7,000 per coin.
Just a few months after crypto speculators anticipated a meteoric rise in the price of Bitcoin – some still believe it will eventually reach $1 million per coin – the value of Bitcoin dropped about 10 percent in one day, illustrating the extreme volatility of this popular online financial instrument.
News reports explain that Bitcoin lost about $500 in value in just one hour, bringing with it price plunges for many other digital currencies as well. This all took place in the immediate aftermath of a "cyber intrusion" that resulted in a loss of about 30 percent of the coins traded on the Coinrail platform.
While an official tally of the value lost was not quantified, local South Korean news outlet Yonhap reported an estimated loss of about 40 billion won's worth of stolen coins – which translates to nearly $37 million in U.S. currency.
"Seventy percent of total coin and token reserves have been confirmed to be safely stored and moved to a cold wallet [not connected to the internet]," reads a statement issued by Coinrail following the incident.
"Two-thirds of stolen cryptocurrencies were withdrawn or frozen in partnership with related exchanges and coin companies. For the rest, we are looking into it with an investigative agency, related exchanges and coin developers."
Korean law enforcement agencies launch investigation into Coinrail heist
Cryptocurrency heists are nothing new, of course. Back in December, Natural News reported that hackers had stolen about $64 million worth of Bitcoin from the NiceHash marketplace – and this was after several other similar thefts from other platforms.
All of this really eats away at the credibility of digital cryptocurrencies, many of which can apparently be hacked with relative ease and vanish in an instant. That's why South Korean authorities have launched an investigation into the matter, which they hope will lead to the identification of the perpetrator(s) responsible.
"We secured the access history of Coinrail servers and we are in the process of analyzing them," stated a spokesperson from the local police department.
Why this is particularly necessary in South Korea is that the Asian country is somewhat of a hub for cryptocurrency. The world's busiest virtual coin exchange, Bithumb, is located there, as are a number of other popular exchanges.
A similar situation occurred to the Japanese cryptocurrency exchange Coincheck back in January, that resulted in the theft of more than $500 million worth of cryptocurrency. While Coincheck has already begun reimbursing the victims, it now faces multiple class-action lawsuits – which is something Coinrail is likely trying to avoid.
"The question is: is there any limit to these hacks?" asks Naeem Aslam from the online trading platform ThinkMarkets.
"After every few months, we are seeing the same pattern emerging. This is the result of loose regulatory control and regulators must step in to protect the consumers. Anyone who wants to do anything with exchanges should be forced to adopt high-grade security and regular security upgrades."
Regulators in the United States are currently in the process of taking this advice as they continue an ongoing investigation into potential price manipulation fraud. Popular U.S. crypto platforms like Coinbase, Bitstamp, itBit, and Kraken have all been asked to share their trading data with regulators, particularly as it pertains to the so-called "futures contracts" market.
"Plenty of latecomers to the cryptocurrency rally have had their fingers burnt, have taken their losses (or are still sitting on them) and have vowed never to return," says David Jones, the chief market strategist at the trading platform Capital.com.
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