One of the issues that need to be addressed in the world of cryptocurrencies is the security of cryptocurrency exchanges. It happened several times already. In fact, Japan acted by having new rules and regulations when it comes to those businesses looking to operate within Japan. And for this reason, Kraken decided to just say goodbye to the Japanese market while Coinbase had no other choice but to work together with regulators.
Many believe that it is the lack of regulations within the crypto market that make it easy for hackers to attack crypto-related businesses. And for this reason, Japan’s strict rules regarding cryptocurrency exchanges may look costly, but this can add a layer of security to investors.
Recently, South Korean cryptocurrency exchange, Coinrail, confirmed on their tweet that they experienced an attack. And at the same time, because of the cyber-attack, Bitcoin’s price dropped by 10%. Just to give you an idea, Bitcoin lost around $500 in just one hour. It dropped to $6,627 despite already having a standstill in the past few days.
The latest attack showcases not only the lack of security but also the weak regulations when it comes to the crypto market.
Case of Cyber Intrusion
According to Coinrail as it announced on its website, their system was hit by “cyber intrusion”. The company lost approximately around 30% of the coins that are being traded within the exchange. However, it didn’t quantify the exact amount that has been lost. However, Yonhap, which is a news agency estimated that the damage was at around 40 billion won or around 31.1 million dollars.
According to Coinrail, “Seventy percent of total coin and token reserves have been confirmed to be safely stored and moved to a cold wallet. Two-thirds of stolen cryptocurrencies were withdrawn or frozen in partnership with related exchanges and coin companies.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”.
The police already began their investigation even mentioned that: “We secured access history of Coinrail servers and we are in the process of analyzing them”.
What Makes It a Big Deal?
Coinrail is one of the largest cryptocurrency exchanges in the world. 24 hours before the hack, Coinrail was able to trade around $2.48 million. However, after the hack, the crypto exchange decided to stop its operation. It is only displaying a message about the incident.
The bright side is that Coinrail says that its team can recover around 20 percent of the cryptocurrencies that were stolen. However, as for the remaining 10 percent, the company is still doing its investigations not to mention the recovered funds will either be frozen or recalled.
According to reports, Coinrail was mostly trading ERC20 tokens. Among the digital assets being traded include Pundi X which took the biggest hit. Around $19.5 million of the particular cryptocurrency was stolen.
These incidences don’t do any good to the crypto market. It adds hesitation on the part of investors. And also, it makes regulators impose stricter rules and regulations. This isn’t the first cryptocurrency exchange that experienced hacking problems.