April 19, 2024

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[THE INVESTOR] Yapizon, the operator of Korean cryptocurrency exchange Youbit, said it is shutting down after a second cyberattack early morning on Dec. 19 led to a loss of 17 percent of its assets, the company said on its website.

Yapizon said the exchange was hacked at around 4:35 a.m., but declined to specify the exact amount of losses. As of 2 p.m., all transactions on the exchange were halted. The firm is now filing for bankruptcy, the first for a digital currency exchange in Korea. 

Yapizon, the operator of Korean cryptocurrency exchange Youbit, announces its shutdown on its website on Dec. 19.

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The latest cyberattack comes as the Korean government is mulling tougher measures to control what it sees to be an overheating of cryptocurrency markets.

Yapizon had first suffered a cyberattack in April this year, ruled to be masterminded by North Korea. The incident wiped out 5.5 billion won (US$5.06 million) worth of assets, with customers bearing the losses.

“We are doing our best to minimize damages but we can’t figure out the exact amount of losses,” an official of the company told local media.

The company said it would be able to compensate customers with insurance money and proceeds from the sale of management rights.

But some critics are raising doubts about the intent behind the latest cyberattack, as it took place less than two weeks after Yapizon took out a 3 billion won worth liability insurance from DB Insurance.

Youbit is not a member of the Korea Blockchain Association, composed of 14 major cryptocurrency exchanges including Bithumb and Coinone, which unveiled last week a set of self-regulatory measures aimed at ensuring transparency and security in cryptocurrency trading.

“Youbit got hacked the last time because it had put too many assets into hot wallets and I can’t understand why they have not addressed that,” said Kim Jin-hwa, co-founder of the Korea Blockchain Association.

Hot wallets refer to accounts kept online for holding crypto assets. Most exchanges also have cold wallets where the assets are stored offline, safe from hacking.

Members of the association are obligated to put at least 70 percent of cryptocurrency deposits in cold wallets.

By Park Ga-young (gypark@heraldcorp.com)