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Fall in Bitcoin value follows latest cryptocurrency heist

Image credit: REUTERS/Tyrone Siu

Billions of dollars have been wiped off the cryptocurrency market following the news that a medium-sized cryptocurrency exchange based in South Korea has fallen victim to a cyber attack.

Coinrail announced on Twitter and on its website that it has temporarily suspended its services following a “cyber intrusion” into its platform at dawn.

It reports that a number of ERC-20-based tokens (a popular token standard for Ethereum-based cryptocurrencies) have been stolen, although it has not estimated the worth of these tokens. It has frozen trading in a handful of small cryptocurrencies – Pundi X (NPXS), NPER and Artex Coin (ATX), all of which were affected by the incident.

Coinrail stated that 70 per cent of its reserves have been safely placed in “cold storage”: offline reserves of cryptocurrency far less vulnerable to cyber attacks. Meanwhile, two-thirds of the leaked coins have been frozen, while the whereabouts of the remaining third of the tokens are unknown.

According to the Korea Herald, police are working with Coinrail on an investigation into the missing tokens. A spokesperson for the police said: “We secured the access history of Coinrail servers and we are in the process of analysing them”.

According to a Pundi X blog post examining the incident, the attacker may have stolen millions of tokens worth a total of $40m (£30m). Following the incident, Coinrail alerted Pundi X to an address likely associated with the attacker, which was then found to try to sell on tens of millions of what could be stolen tokens.

News of the heist – following on the heels of the news that US regulators are investigating four large cryptocurrency exchanges (Coinbase, Bitstamp, itBit and Kraken) for possible price manipulation – may be responsible for triggering a small crash in the cryptocurrency market. However, some commentators have instead argued that panic selling and price manipulation could be responsible for the fall.

$20bn (£15bn) was quickly wiped off the entire cryptocurrency market, while the world’s largest cryptocurrency, Bitcoin, took a more than 10 per cent tumble to $6,650 (£4,970). Another of the world’s largest digital currencies, Ether, has also fallen more than 10 per cent. Since the attack, the estimated value of the tokens stolen from Coinrail has fallen from $40m (£30m) to $30m (£22m).

The incident is the latest in a series of cryptocurrency heists which have previously affected South Korea-based Youbit, Japan-based Coincheck and Italy-based BitGrail.

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