South Korea-based cryptocurrency exchange Upbit has likely suffered a hack in which 342,000 ETH was stolen. The stolen ETH, which was moved to an “unknown wallet,” is worth approximately $50 million, all of which Upbit says it will cover using its corporate fund. In the interim, all deposits and withdrawals are suspended. Upbit has transferred all cryptocurrency funds from a hot wallet to a cold wallet and expects that it will be at least two weeks before deposits and withdrawals resume.
Upbit, which is South Korea’s largest cryptocurrency exchange, has confirmed that the ETH were moved from a hot wallet to an “unknown wallet.”
“At 1:06 PM on November 27, 2019, 342,000 ETH (approximately 58 billion won) were transferred from the Upbit Ethereum Hot Wallet to an unknown wallet.”
The exchange also provided the unknown wallet address of: 0xa09871AEadF4994Ca12f5c0b6056BBd1d343c029.
The crypto community was largely left to connect the dots, as while it was clear that an abnormal transfer of the ETH had occurred, the exchange has yet to call it a hack. Cryptocurrency analyst Joseph Young has been following the chain of events closely and believes there is a high probability of an insider job, saying:
“The “hacker” timed when UPbit was making crypto transfers to its cold wallet (other alts like TRON, etc.) Hence, I think the probability of it being an inside job is higher than external breach. No details are certain for now.”
The cryptocurrency community was quick to respond, including Changpeng Zhao, who is at the helm of crypto exchange Binance. CZ knows how it feels. Earlier this year, his exchange suffered a similar fate after hackers stole 7,000 bitcoins worth $40 million in a security breach. Binance similarly covered the loss for its users, dipping into its emergency insurance fund SAFU, or Secure Asset Fund for Users.
Dovey Wan, founding partner at Primitive Ventures, is often the bridge between crypto developments in the Eastern and Western hemispheres. She was among the first to report the security breach on social media, pointing to a report on South Korean platform Naver. She also points out that the hack is being investigated by the Korea Internet & Security Agency (KISA), the agency by which Upbit previously received a security certificate to operate.
The Upbit hack is a blow to the cryptocurrency industry at a critical time when the market is trying to find its footing. According to The Block research, the crypto industry has experienced eight security breaches year to date, bringing to the combined tally of stolen funds to approximately $1.4 billion.
The ETH price was down 1% to $145 on the heels of the hack but has since turned positive, as have most of the top 10 cryptocurrencies based on market cap including bitcoin.
The 342,000 ETH in question has not triggered a market sell-off. Young points to the fact that the exchange is using its own assets to cover the losses. Besides, crypto exchanges are on high alert and Young says it would be difficult for the hacker to unload the crypto so quickly in the wake of the event.