Nearly $50 million was swiped from a South Korean cryptocurrency exchange, the industry’s latest setback as it struggles with problems still plaguing cryptocurrencies and the venues where investors trade them.
Upbit, one of South Korea’s largest crypto exchanges, said 342,000 ether coins—worth roughly $49.2 million—were sent to an unidentified crypto wallet Wednesday afternoon. The company revealed the wallet address where the coins were sent and said it reported the incident to South Korean authorities who are investigating the matter.
Ether, which runs on the Ethereum blockchain, is the world’s second-largest cryptocurrency by market value, trailing only bitcoin, according to research site CoinMarketCap.
Upbit said it has barred all cryptocurrency withdrawals and deposits at the exchange since the heist, a ban that the exchange said could last at least two weeks. Customers can still trade or buy more cryptocurrency within the exchange, which said it would cover losses with its own assets.
The irregular dealing on Wednesday was first identified by Upbit’s internal monitoring team, which has algorithms in place to fish out unusual transactions based on an account holder’s usual trade behaviors, according to a spokesman for the company.
Hacks contributed to the steep drop in the value of bitcoin and other cryptocurrencies last year, after their manic surge in 2017. Investors feared the hacks would hinder widespread adoption of cryptocurrencies, particularly among institutional investors who haven’t piled into the market at a pace that some industry experts had hoped for.
But these days, news of a hack tends to have less impact on daily prices.
For instance, bitcoin jumped back above $7,500 Thursday morning in Asia. It had dropped below $7,000 to a six-month low on the weekend after China reaffirmed its tough stance on companies involved in cryptocurrency trading and fundraising. Bitcoin’s value has more than doubled this year but remains below its all-time high of nearly $20,000 in late 2017. Ether is slightly higher for the year but is nearly 90% below its own record high.
Bitcoin, ether and other cryptocurrencies exist on independent networks and operate on blockchain technology, an open-ledger system that stores a public record of transactions. In an effort to replicate the anonymity of physical cash, those transactions aren’t connected to an identity. The anonymity is appealing to cryptocurrency proponents but is also attractive to hackers and makes it difficult to catch thieves.
An estimated $4.4 billion was swiped in cryptocurrency thefts and scams globally this year through the end of September, up from $1.7 billion in all of 2018, according to CipherTrace, a cryptocurrency research company.
It said about two-thirds of the world’s top 120 cryptocurrency exchanges it identified have weak policies for monitoring customers on their respective platforms. That could make it easier for hackers—and other bad actors, such as money launderers—to misuse exchanges.
South Korea has historically been one of the most active markets for cryptocurrency trading. But several platforms that operate there have been hit by hacks in recent years.
An official at the Korea Internet & Security Agency, which investigates crypto-exchange issues, said that the situation at Upbit has been registered as “an irregular withdrawal” and that it isn’t clear whether the exchange was hacked. The agency said it can’t confirm details for ongoing investigations.
Upbit, which launched in October 2017, provides a large selection of crypto offerings in South Korea. Unlike several other Korean exchanges, it hadn’t reported any cybersecurity breaches before Wednesday’s heist.
Write to Eun-Young Jeong at Eun-Young.Jeong@wsj.com and Steven Russolillo at steven.russolillo@wsj.com
