Cryptocurrencies tumble after second South Korean exchange says it was robbed

Hong Kong — Cryptocurrencies dropped after the second South Korean exchange in as many weeks said it was the victim of a theft, renewing the fear about the security of digital-asset trading venues.

Bithumb, ranked seventh in the world by traded value on Coinmarketcap.com, said on Wednesday that about 35-billion won ($32m) worth of coins were stolen. The exchange said it would compensate victims, adding that it had halted cryptocurrency deposits and withdrawals and moved investor assets to a so-called cold wallet that was disconnected from the internet and less vulnerable to hacking.

Bitcoin, the largest cryptocurrency, dropped as much as 2% and was trading at $6,598 as of 10.06am in Hong Kong, bringing this year’s decline to 54%, according to Bloomberg composite pricing. Other tokens including Ripple, Ethereum and Litecoin also retreated.

Enthusiasm for virtual currencies has waned in 2018 partly due to a string of cyber heists, including the nearly $500m theft from Japanese exchange Coincheck in late January. Last week, a South Korean venue called Coinrail said that some of the exchange’s digital currency appeared to have been stolen by hackers, but it did not disclose how much.

South Korea was at the centre of 2017’s global crypto-mania, playing host to some of the world’s most active exchanges. Demand for bitcoin was so extreme at one point that it lifted prices in the country 50% higher than those in America.

The speculative fervour has since cooled amid a government crackdown, but Korean exchanges are still among the world’s most active. The country’s policy makers are debating comprehensive regulations for cryptocurrencies, with proposals ranging from shutting down local exchanges to allowing them to operate under increased supervision.

Some Asian-listed stocks with exposure to digital currencies fell on Wednesday. South Korea’s Omnitel and Vidente retreated at least 9%.

Bloomberg