The South Korean exchange trading bitcoin and other virtual currencies declared itself completely bankrupt after being targetted by a cyberattack for the second time this year, highlighting the risk over cryptocurrencies as they soar in popularity.
The Youbit exchange had lost 17% of its assets in the attack on Tuesday.
It came eight months after nearly 4,000 bitcoin — then valued at 5.5 billion won ($5 million) and nearly 40 percent of the exchange’s total assets — were stolen in a cyber attack blamed on North Korea.
“We will close all trades, suspend all deposits or withdrawals and take steps for bankruptcy,” the exchange said in a statement which did not assign blame for the latest attack.
All its customers will have their cryptocurrency assets marked down by 25%, it said, adding it would do its best to “minimise” their losses by using insurance and selling the remains of the firm. The exchange — founded in 2013 — brokered trades of multiple virtual currencies including bitcoin and ethereum.
Alarmingly, the South Korean cryptocurrency exchange has gone completely bankrupt for the first time in history. Investing in virtual currencies has become the popular trend these days in the hyper-wired South, whose trades account for some 20 percent of global Bitcoin transactions.
According to reports, around one million South Koreans are estimated to own bitcoin. Due to high demand, prices for the unit are around 20 percent higher than in the US, its biggest market. Global bitcoin prices have soared around 20-fold this year.
Concerns over a potential bubble have unnerved Seoul’s financial regulators, who last week banned its financial institutions from dealing in virtual currencies.