Youbit exchange Announces Bankruptcy Filing Following Severe Hack
Youbit, a popular South Korean exchange, is dealing with some severe issues. The exchange announced its decision to file for bankruptcy after a new hack has occurred. This was the second attack that Youbit experienced in 2017 and it appears that it was more than what the cryptocurrency exchange could handle.
Hackers steal 17% of Youbit's cryptocurrency reserves
The news was revealed in a public announcement shared by the company which owns the exchange. Youbit announced all its users that following a hack, attackers were able to access the exchange's hot wallet and steal 17% of its assets.
Youbit stated that it actually stored 83% of the funds operated by the exchange in a cold wallet, which was of course not affected. However, although 83% of its assets remained untouched, the company decided to file for bankruptcy and has also halted all trading on the exchange.
Youbit suffered a similar hack in April
So, Youbit was the victim of a similar attack earlier this year, in April. At that time, the company revealed that attackers were able to steal about 4,000 bitcoins. Following the attack, South Korean authorities claimed that the hackers were acting in collaboration with North Korea. The April attack determined the company to take some enhanced security measures.
Customers can withdraw their assets
Considering that Youbit filed for bankruptcy, the company decided to mark down customer assets to 75% of their market value. Customers can start withdrawing their assets. Meanwhile, the company will proceed with the bankruptcy process and will sell its operating rights and file an insurance claim. When the bankruptcy process will be concluded, Youbit will pay customers the remainder of their funds.
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An important thing to mention in this context is that Youbit was not one of the biggest exchanges in the country. In fact, it is safe to say that it was a relatively small exchange that handled a limited volume of trading.
Overall, this means that the impact on the market will not be that high. However, the case can still raise some concerns on how quickly bitcoin wallets can be hacked and funds can be stolen.
Furthermore, the hack reveals that cryptocurrency exchanges become more and more exposed to attacks by third parties, as due to the increase in the price of cryptocurrencies they become an attractive target for attackers.