Coinrail is a cryptocurrency exchange in South Korea, and it announced on Sunday, June 10, that there had been a hacking attempt. Its website said, “70% of its total coin/total reserves were safe” and, “Two-thirds of the coins confirmed to have been leaked are covered by freezing / recalling through consultation with each coach and related exchanges.”[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.] [Author’s note: There is no official price for Bitcoin, so I use round numbers. I use CCs as an acronym for cryptocurrencies.]
This hack has led to Bitcoin, Bitcoin Cash, Ethereum, Ripple and other cryptocurrencies falling 5% or more and ending two weeks of relatively low volatility. Bitcoin had been trading around $7,600 when in the space of 30 minutes it fell to less than $7,300 and has been trading in a $100 range over the past 15 hours.
In checking coinmarketcap.com over the past 24 hours Bitcoin is the least impacted with a fall of just under 5% . The next nine largest cryptocurrencies by market cap have dropped by 5% to 11%.
At least the third hack of a South Korean exchange in the past year
In July last year Bithumb, South Korea’s largest cryptocurrency exchange and the world’s fifth largest at the time, was hacked. Information on 31,800 customers was compromised. While there wasn’t direct access to customer accounts the hackers gleaned enough personal information to “voice phish” additional details from customers to transfer cryptocurrencies out of them.
In December last year Youbit, a South Korean Bitcoin exchange, was attacked. Almost 4,000 Bitcoins or 17% of its assets worth about $48 million were stolen. A Reuters article said that all customers CC assets would be marked down by 25%, but Youbit wound up filing for bankruptcy.
Coinrail is the latest South Korean cryptocurrency exchange to be compromised. While it isn’t known if North Korea is responsible for these incidents, it is widely believed they are very active to obtain cryptocurrencies so that they can be exchanged into hard currencies.
Technical rebound tripped up by hack
Last week Robert Sluymer, Managing Director and Technical Strategist at Fundstrat Global Advisors, published a report detailing what he believed could be positive technical developments suggesting the first stage of a three-stage bottoming process is developing. Short-term momentum indicators are beginning to bottom.”
While he added that this could be premature, I don’t think another hacking incident was on his mind about Bitcoin’s price movement. These types of incidents are a major obstacle for Bitcoin and other cryptocurrencies to become widely accepted.