A South Korean Bitcoin exchange has been forced to close after being hit by cyberattacks twice within a year, causing a crippling 17 per cent loss of assets that led to bankruptcy.
Youbit sustained a devastating blow in Spring 2017 when 4,000 bitcoins were stolen, an amount equal to in the region of $72 million.
The South Korean Security Agency (Kisa) blamed the initial cyberattack on North Korea, with the nation having been blamed previously for financially motivated attacks on South Korea and other cryptocurrency exchanges in the past.
Leigh-Anne Galloway, Cyber Resilience Lead at Positive.com, said: “Youbit’s announcement of its closure today is simply another example of the devastating consequences of getting security wrong. As cryptocurrencies continue to generate greater value and are adopted more widely, they will become an increasing target for cybercriminals who can smell out an opportunity to make a lot of money, very quickly.”
Customers can expect to regain 75 percent of the value of the assets they held with the exchange, according to a Youbit statement, representing the significant impact successful cyberattacks on exchanges can have on customers.
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Cryptocurrencies and bitcoin in particular have been at the centre of a storm of excitement, with the price of bitcoin close to hitting $20,000 per unit, up from a record of just over $1,000 at the beginning of the year. Cyberattacks like those that have destroyed Youbit may significant weaken investor confidence.
“While the exact details of the attacks on Youbit are unknown, an examination of the other cryptocurrency attacks over the year suggest that organisations need to start with the basics. Firstly, server infrastructure and the applications that host cryptocurrencies need to be seen as a security risk – as this is a vector for attack we have seen time and time again,” said Galloway.
The instances of cyberattacks experienced by Youbit are not the first examples of successful attacks targeting cryptocurrency, around $30 million in Ethereum cryptocurrency was stolen earlier this year.
Galloway said: “If cybersecurity continues to be a second thought, we will continue to see sustained attacks that damage the reputation of virtual currencies as a whole, and ultimately results innocent users losing their money to criminals.”