Is South Korean Exchange Hack Responsible for Bitcoin Price Plunge?

Bitcoin price plunge over the weekend is generally being linked to another cryptocurrency exchange hack in South Korea. This time it was a smaller exchange called Coinrail that was breached by blackhats who made off with over $40 million in altcoins which may have caused the massive sell-off on Sunday leaving a trail of red all through the top 100 trading cryptocurrencies.

Hack Aimed at User Accounts

Coinrail is a relatively obscure exchange that trades 50 coins and is ranked 98th in the world with a 24-hour volume of about $2.65 million, according to data from Coinmarketcap.com. The news came first from the exchanges own Twitter account where they announced that there had been a “cyber Intrusion” and some coins where confirmed jeopardized.

해킹공격시도로 인한 시스템 점검중입니다. 일부코인(펀디엑스,NPXS)이 확인되었으며 추가적인 코인피해가 있는지 여부를 확인중입니다. 추후 자세한 사항은 재공지하겠습니다 / There has been an cyber intrusion in our system. We’re confirming it and some coins(Pundi X, NPXS) are confirmed.

— coinrail (@Coinrail_Korea) June 10, 2018

Further information followed which broke down the haul of altcoins. First on the list is $19.5 million worth of NPXS tokens issued through an ICO held by payments startup Pundi X. Then another $13.8 million of an ICO generated coin called Aston X used on a platform to decentralize documents. These followed by $5.8 million of Dent tokens and $1.1 million of Tron. There were also smaller amounts of five other tokens pilfered in the attack.

Similar to the Coincheck hack earlier this year in Japan the issuing companies weren’t hacked, the tokens were stolen from user accounts held by the exchange. Coinrail has responded to the hack by taking its service offline and moving the remainder of its assets – which it tallies as 70% of its total holdings – into cold storage as an investigation is conducted into the crime.

ICOs Proactively Respond

Pundi has reported that it has frozen the nearly $20 million worth of its tokens stolen and ceased trading across all exchanges in order to assist the South Korean police with their investigation. Aston and NPER also reported that they would freeze their stolen tokens with NPER which lost $860,000 adding that it would incinerate their lost tokens to make them useless to the thieves.

It is as yet unclear whether or not Coinrail will follow the precedent set by Coincheck in refunding it’s users the value of their stolen coins. As a still unregulated currency digital tokens are not insured by any government which means that when they are stolen there is no agency to turn to for a refund.

The hack which was relatively small when compared to the legendary Mt. Gox or Coincheck theft is widely being blamed for the plunge in Bitcoin and consequently every other coin price trading in the top 100.  Some skeptics on social media doubt whether a breach in the security of such an obscure exchange could be responsible for the loss of what Fortune magazine reported to be $115 billion market wide but in crypto world, the smallest pebble can cause a mighty wave.

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