Last weekend was another tough one for the cryptocurrency market…
The hack of a modest cryptocurrency exchange in South Korea called Coinrail is to blame for the most recent sharp drop in Bitcoin and other popular currencies. This resulted in a loss of billions of dollars in value overnight.
The hack caused a massive sell-off Sunday. And It left a trail of red throughout the top 100 trading cryptocurrencies.
Coinrail isn’t a huge exchange. It only trades around 50 coins and is ranked the 89th crypto exchange in the world with a 24-hour volume of about $2.65 million, according to CoinMarketCap.
The news of the hack initially came from the exchange’s own Twitter account. There, Coinrail announced that there’d been a “cyber intrusion” and that some coins had been confirmed jeopardized.
Later, we learned that the estimated total of all the lost currency from the breach is believed to be around $40 million.
But more importantly, this hack added to uncertainties that have surrounded the virtual currency market. And after Coinrail reported losing around 30% of its reserves from the attack, Bitcoin’s price plummeted.
After the breach, the value of Bitcoin and many other currencies fell to their lowest levels this year.
As of Monday, Bitcoin was down by more than 7% to around $6,700. That’s a drop of more than 60% altogether since Bitcoin’s all-time high of almost $20,000 last December.
Ethereum, another popular cryptocurrency, also fell. And this contributed to a loss of well over $40 billion in virtual currencies’ value from Sunday to Monday. That represents a drop in market capitalization from $340 billion to around $291 billion.
Analysts say other factors are also involved in the cryptocurrencies’ latest fall. That includes the current lack of high trading volume. It’s safe to say, people are still wary of the volatile virtual currencies.
“The demand from investors has notably declined,” Crypto Coin News reported.
Coinrail says two-thirds of the stolen currency has been recovered through freezing or recalling it. And the remaining third is under investigation by police and industry experts.
The stolen coins that are now frozen were in the NPXS, NPER, and ATX currencies.
The breakdown of the stolen altcoins haul is as follows:
- $19.5 million worth of NPXS tokens that had been issued through an initial coin offering (ICO) held by payments startup Pundi X.
- Another $13.8 million of an ICO-generated coin called Aston X, which is used on a platform to decentralize documents.
- $5.8 million of Dent tokens.
- $1.1 million of TRON tokens.
- Smaller amounts of five other tokens were also pilfered in the cyberattack.
To protect its other assets, Coinrail officials issued a statement that said they’d taken the exchange offline and moved the remainder of its assets to cold storage. This is while officials review the security system and work with law enforcement to investigate what happened.
The statement made no mention of how or if the exchange will reimburse customers for their losses.
Coinrail is only the latest exchange to report losing millions of dollars worth of digital currency to hackers.
In January, the Japanese exchange Coincheck said it experienced a theft of XEM cryptocurrency valued at $400 million.
Other exchanges that have reported similar events in recent months include Tether and EtherDelta.
But exchanges aren’t the only thing in the crypto world that’s reporting major losses.
In March, researchers at 360 Netlab reported on an operation that had been stealing Ethereum coins from end users who’d been storing them in poorly secured apps and mining rigs.
And early Monday, the researchers said the wallet used in the Netlab hack now amassed more than $20 million worth of coin.
So far, it’s unclear whether or not Coinrail will follow the precedent set by Coincheck in refunding its users the value of their stolen coins.
Digital tokens are still unregulated currencies and are not insured by any government. And this means that when they’re stolen, there’s no agency in place to turn to for a refund.
That’s all for now.
Until next time,
John Peterson
Pro Trader Today