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It’s happened again, folks. Another cryptocurrency hack has taken place in the region of South Korea. This time, the victim is the popular cryptocurrency exchange Up Bit, which has reportedly lost nearly $50 million in Ethereum (ETH) funds.
Up Bit: The Latest Target of Cyberthieves
South Korea, at one time, was one of the world’s largest cryptocurrency hubs. The country was responsible for roughly one-quarter of the world’s bitcoin transactions, though the region has taken on something of a mixed or even hostile attitude towards crypto as of late.
Following in China’s footsteps in 2017, South Korea banned both margin trading and initial coin offerings (ICOs) as a means of keeping investors protected. Over the years, ICOs have gone from being some of the most popular methods for earning capital to among the most controversial.
An ICO works when a startup seeks money to ensure its operations can continue. Thus, the company holds a token offering in which investors provide funds in exchange for a new cryptocurrency that grants them access to the startup’s goods and services. The trouble comes in one of two ways: if the people behind the ICO are fraudulent from the beginning, they will host the event and then run off with the money, ensuring investors are cheated out of what they’ve earned and pledged.
This accomplishes nothing minus the big paychecks the “founders” garner. Paychecks they undoubtedly failed to earn. Investors are inherently left with bruised egos, empty pride and coins they can’t use.
However, not all “bad” ICOs occur through fraud. Some have every intention of earning the money so businesses can start. Sadly, starting a business in today’s economy can be a huge risk, and sometimes, these startups don’t earn the capital they need to stay afloat. Thus, the ICOs, despite their best efforts, don’t produce the money necessary to keep the companies going and they’re forced to shut their doors before they even open.
ICOs can be very up and down in terms of risk, which is why countries like South Korea have arguably ceased to allow them but exchanges still hold great sway within the country. Unfortunately, these platforms don’t always employ the security necessary to keep funds safe.
So Much Money Gone
The hack on Up Bit occurred on Wednesday morning and resulted in $48.5 million in ether tokens being stolen through 17 separate transactions. Many customers of the exchange have reached out to the hackers to see about personally getting their funds back despite executives of the exchange saying that they will not be affected. They simply need time to tally up the total losses and are looking to provide reimbursements over the following two weeks.
It has also been confirmed that Up Bit utilized hot wallets to store the funds, which are less secure than cold storage.