Cryptocurrency Exchange Youbit Hacked for 17% of Its Assets, Files for Bankruptcy

Youbit, a relatively unknown South Korean cryptocurrency exchange, recently published an announcement on its official website revealing it has been hacked, adding that the attackers managed to take 17% of its total assets from its hot wallet and that it has filed for bankruptcy.

Notably, this was the second time that Yaipan, the company that operates the Seoul-based exchange, had to deal with a security breach, as Youbit had been hacked earlier this year as well. According to Reuters, hackers managed to take nearly 4,000 bitcoins – now worth about $68 million – in an attack in April, allegedly perpetrated by North Korean actors.

Following the April incident, Youbit claimed to have beefed up its security policies. Yet, its announcement makes it clear that only 83% of the company’s funds, said to be in cold storage, remain under its control. After following for bankruptcy, the Yaipan halted trading on the platform.

Per the announcement, the exchange marked down customer assets to 75% of their market value, allowing them to be immediately withdrawn. The company added that it will be paying their users back after the bankruptcy proceedings are complete. The statement reads (roughly translated):

“However, in order to minimize the damage to our members, we will arrange for the withdrawal of approximately 75 percent of the balance at 4:00 a.m. on Dec 19. The rest of the unpaid portion will be paid after the final settlement is completed.”

South Korea’s Internet and Security Agency (Kisa), which connected the April breach to North Korean hackers, is working on the case, in an attempt to figure out how the hackers managed to access Youbit’s systems.

Market impact

Youbit was a relatively unknown cryptocurrency exchange, meaning its impact on the cryptocurrency ecosystem might’ve not been too big, although it may still be a factor influencing Bitcoin’s correction – from over $19,000 to $16,500 at press time.

Breaches on market-leading exchanges, like South Korea’s Bithumb, would potentially have a much bigger impact. Bithumb, for example, accounts for roughly 70% of all cryptocurrency trades in South Korea. Users who wish to stay safe are advised not to keep their money on exchanges.

Recently, cryptocurrency mining serviced NiceHash fell to an attack, in which over $65 million worth of bitcoins were stolen from its users. As reported by Core Media, a security expert recently warned that cryptocurrency-related hacks are bound to increase next year, partly because cryptocurrencies are becoming mainstream.