Bitcoin Exchange Youbit to Declare Bankruptcy After Hack

NEWS
Stan Higgins
Dec 19, 2017 at 15:30 UTC  |  Updated  Dec 19, 2017 at 19:04 UTC

A South Korean bitcoin exchange is moving to declare bankruptcy following what it said was a debilitating hack and theft.

A message on Youbit's official website posted today states that, at around 4:34 a.m. local time, an external hack resulted in the loss of "about 17 percent of total assets."

The cyber attack is the second for Youbit, previously known Yapizon. The exchange was previously targeted in April in an attack which South Korean officials believe was conducted with the support of neighboring North Korea. Recent reports indicate that intelligence services in South Korea suspect that North Korea is behind additional attacks against domestic cryptocurrency exchanges, including market-leader Bithumb.

As a result of today's attack, Youbit said that it has halted deposits and withdrawals. According to Reuters, investigators have begun looking into the situation.

And while the company suggested that users may not see the full return of their funds, the statement indicated that Youbit would be disbursing the cryptocurrency it still has in its possession.

"Due to bankruptcy, the settlement of cash and coins will be carried out in accordance with all bankruptcy procedures," the exchange said in a translated statement. "However, in order to minimize the damage to our members, we will arrange for the withdrawal of approximately 75 percent of the balance at 4:00 a.m. on Dec 19, The rest of the unpaid portion will be paid after the final settlement is completed."

The moves are being taken despite what Youbit characterized as a less severe intrusion compared to the one in April. The company also suggested that it would seek to pare losses by tapping insurance funds and selling a stake in the exchange.

"We will do our best to minimize the loss of our members by 17 percent , through various methods such as cyber comprehensive insurance (3 billion [won]) and selling the operating rights of the company," the company wrote.

Editor's Note: Some of the statements in this report have been translated from Korean.

Hack image via Shutterstock

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