youbitBlockchain tech may be secure, but individual wallets are not. Korean cryptocurrency exchange Youbit just suffered its second hack this year and will be shutting down as a result.

While the hack was not catastrophic, exchange management has ultimately decided that the community would not support them moving forward. Good call.

Users will suffer a 25% loss across the board as management sorts out the mess. Hackers made off with 17% of company assets, and the remainder will be consumed through bankruptcy proceedings. The exact process was outlined in a statement from the company copied below.

  1. The coin loss at 4:35 am is about 17% of total assets.
    The other coins were kept in the cold wallet and there were no additional losses.
  2. Loss ratio is low compared to last April, but
    the management of Yaffian Co. , Ltd.
    is going to proceed with the process of stopping the transaction, stopping deposit and withdrawal, and bankruptcy on December 19, 2013 ,
  3. Accordingly, all coins and cash withdrawals and withdrawals will be suspended at 12:00 pm on December 19, 2017.
  4. Due to bankruptcy, the settlement of cash and coins will be carried out in accordance with all bankruptcy procedures.
  5. However, in order to minimize the damage to our members,
    we will arrange for the withdrawal of approximately 75% of the balance at 4:00 am on December 19,
    The rest of the unpaid portion will be paid after the final settlement is completed.
  6. We will do our best to minimize
    the loss of our members by 17% , through various methods such as cyber comprehensive insurance (3 billion) and selling the operating rights of the company
    .
  7. After the notification date, your
    assets will be adjusted to 75% at 4:00 pm on
    December 19 , 2017. Cash and coins deposited after 4:00 pm will be 100% refunded.
  8. The return action will be processed through a separate return application.
    We will inform you of this part through additional notice.

Fallout

The crypto market cap shed nearly $40 billion in early morning trading, and the timing seems to correspond to this news. Since then we’ve seen about a 50% retracement from $603 billion toward the all-time-high of $643 billion, according to Coinmarketcap.Investors continue to shrug off the news as positive developments continue to buoy the market. Bitcoin Cash continues to challenge Bitcoin, with the prices operating inversely in recent trading, and this could also be a factor in Bitcoin’s recent pullback.

If there is one lesson to take from Youbit’s debacle, it is this: utilize cold storage. Cold storage wallets are used to store cryptocurrency offline, and are unhackable by that virtue. Leaving funds on an exchange is the least secure method of storing your currency, as the centralized wallet belonging to the exchange can be targeted.

 
The following two tabs change content below.