Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Security concerns grow over cryptocurrency exchanges
A pedestrian walks past the logo of Upbit, the nation's largest cryptocurrency exchange, in southern Seoul in this file photo. Yonhap
By Lee Min-hyung
Upbit suspends operation following theft of $49 mil. In Ehereum
By Lee Min-hyung
Concerns have resurfaced over the credibility of cryptocurrency transactions, after the nation's largest digital currency exchange lost 58 billion won ($49 million) following a suspicious transaction.
Dunamu, operator of the exchange Upbit, notified its users of the incident, saying that about 342,000 Ethereum units worth 58 billion won were transferred to an unidentified wallet from the Upbit Ethereum Hot Wallet at around 1 p.m. Wednesday. Ethereum is the world's second-largest cryptocurrency.
The exchange said it will cover any losses with its own assets; but it will take a couple of weeks for its services to be normalized.
The latest incident has sparked a sense of anxiety over whether cryptocurrencies are stable enough for safe transactions, as this was not the first such irregularity to occur at a local exchange.
In March, Bithumb, another Korean cryptocurrency exchange, suffered a loss of about 50 billion won in a cyberattack.
Lee Jong-lak, a cybersecurity professor at Yeungnam University College, said local cryptocurrency exchanges will remain vulnerable to security threats unless they hire more security experts and build a stronger online infrastructure.
“Generally speaking, big companies are less vulnerable to cyber threats, as they make huge investments in cybersecurity,” he said. “But things are different for small- and medium-sized enterprises, such as the exchanges.”
They need to reinforce their security systems, even if investment in the area is not visible, or help make more money, according to the professor.
“On top of that, the government should also tighten regulations on such emerging financial platform operators,” he said.
“The entry barrier is not that high for the industry, as there are few regulations as of now. Tightening security to a certain level should also be included as one of the prerequisites for any exchange operator to do business in the industry.”
It will still take some more time to find out the exact cause behind the latest incident, as police are still investigating the case.
Officials from the Korea Internet and Security Agency (KISA) were also dispatched to Dunamu headquarters in southern Seoul to look into the details of the cyberattack.
“Considering the scale of the loss, chances are a pan-governmental investigation team from the authorities, such as the Financial Supervisory Service and the Ministry of Science and ICT, will soon be established to investigate the exact cause behind the cryptocurrency theft,” a KISA official said.
The internet security authority, for its part, is also expected to take part in the investigation.
“Once Dunamu requests an investigation by KISA, we will look to see if there was any malicious code detected before and after the suspicious transaction,” the official said.
According to data from Cho Won-jin, co-head of the Our Republican Party, police have so far investigated eight cyberattacks on cryptocurrency transactions between July 2016 and this March. The losses amounted to 163.5 billion won during the period.