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Bitcoin Plunges Near 2018 Low After Cryptocurrency Exchange Is Hacked

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Bitcoin plunged near its low for the year Monday after a South Korean cryptocurrency exchange was hacked, resulting in the loss of about $37 million.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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The speculative asset class fell as low as $6,653.97 in the early hours, according to Coindesk. It lost more than 10% over the weekend and has shed almost two-thirds of its value since reaching a record high just shy of $20,000 in December. In total, $42 billion of the market value of cryptocurrencies has been wiped out over the weekend.

Bitcoin was trading for $6,759.43, approaching its 2018 low of $5,947.40 reached in February. Ethereum was at $522.21, down from more than $572 on Sunday; Bitcoin Cash plunged to $930.94 from $1,035 on Sunday; and Litecoin sank to $106.06 from Sunday's $114.

Among Bitcoin-related stocks, Riot Blockchain (RIOT) fell 3.5% in the stock market today, Overstock.com (OSTK) rose 0.6%, Marathon Patent Group (MARA) tumbled 7%, and Bitcoin Investment Trust (GBTC) plunged 8%.

The price movement came after the small Coinrail exchange revealed Sunday that it had fallen victim to a "cyber intrusion." Several alternative versions of Bitcoin, so-called alt coins, appeared to have been stolen by the hackers.

The exchange said it is cooperating with a police investigation into the hacking. Trading has been suspended since the attack.

The South Korean news outlet, Yonhap News Agency, estimated that about $37 million worth of the digital currency was taken during the heist, Reuters said.

While many major Korean cryptocurrency exchanges adopted measures to protect users in January, this was not one of them.

"Coinrail is not a member of the group that promotes self-regulations to enhance security," Korea Blockchain Industry Association representative Kim Jin-Hwa said. "It is a minor player in the market and I can see how such small exchanges with lower standards on security level can be exposed to more risks."

Hacking has been a consistent problem for cryptocurrency exchanges, despite the purported security of Bitcoin itself. Back in March the Wall Street Journal estimated that investors had lost around $1.4 billion to hacks.

Earlier this year, more than $500 million worth of digital currency was taken after Japanese exchange Coincheck was hacked. And fellow Japan-based exchange Mt. Gox filed for bankruptcy in 2014 after losing another $500 million worth of Bitcoin. At its height, the exchange had handled more than 80% of the world's trades in the cryptocurrency.

According to Coinmarketcap.com, Coinrail was the 98th largest cryptocurrency exchange.

Bitcoin Warning

Meanwhile, short-seller James Chanos has warned that cryptocurrencies could have their value wiped out by a financial crisis.

"For those who believe that you need to own digital currency as a store of value in the worst-case scenario, that's exactly the case in which a digital currency will work the least," Chanos said in an interview with the Institute for New Economic Thinking. "The last thing I'd want to own is Bitcoin if the grid goes down."

"We're now nine years into this bull market, same as the '90s, so I suspect that now things are starting to percolate. ... This is simply a security speculation game masquerading as a technological breakthrough in monetary policy."

Chanos has been dubbed the "dean of short sellers, and famously shorted Enron before its monumental accounting fraud was revealed.

https://www.investors.com/news/bitcoin-plunges-low-cryptocurrency-exchange-hacked/?src=A00220&yptr=yahoo

 

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