Youbit Shuts Down Cryptocurrency Exchange After Second Hack, Files For Bankruptcy (bbc.com)

phalse phace writes: After experiencing another hack, South Korean crypto-currency exchange Youbit has closed their doors and is filing for bankruptcy. BBC reports: "Youbit, which lets people buy and sell bitcoins and other virtual currencies, has filed for bankruptcy after losing 17% of its assets in the cyber-attack. It did not disclose how much the assets were worth at the time of the attack. In April, Youbit, formerly called Yapizon, lost 4,000 bitcoins now worth $73 million to cyberthieves. South Korea's Internet and Security Agency (Kisa) which investigates net crime, said it had started an enquiry into how the thieves gained access to the exchange's core systems. Kisa blamed the earlier attack on Youbit on cyber-spies working for North Korea. Separate, more recent, attacks on the Bithumb and Coinis exchanges, have also been blamed on the regime. No information has been released about who might have been behind the latest Youbit attack. In a statement, Youbit said that customers would get back about 75% of the value of the crypto-currency they have lodged with the exchange."

Comments

Re:The paradox of money

[Zaelath]

tl;dr, Bitcoin is only useful for money laundering? Oh and fleecing rubes.

But wait! I thought.......

[mschuyler]

Bitcoin's Rise May Reflect a Monumental Transfer of Trust From Human Institutions Backed By Gov't To Systems Reliant on Well-Tested Code, Says Tim Wu (see a couple of posts down)

Re:But wait! I thought.......

[Joce640k]

Tim Wu has just stuck his foot in his mouth in front of the entire Internet.

Re:But wait! I thought.......

[JcMorin]

The problem is not with Bitcoin but with exchange not keeping their private key securely.

Re:But wait! I thought.......

[kyncani]

I don't care that much if the exchange goes under for security reasons or whatever.

What I do care about is that my money does not go *poof* so I can continue to live.

If your money is guaranteed by the state you know you're not going to be abandoned just because a bank somewhere made poor choices you did not know about.

Another reason I'm not a Bitcoin thousandaire

[rmdingler]

From the onset, I wanted to like the idea of a non-governmental currency that had a cash-like anonymity, even though a lot of informed folks likened it to a Ponzi scheme.

Beginning with the Mt. Gox debacle though, this now rather routine loss of millions by an exchange is where I lost faith in the Bitcoin as an investment option and an alternative to government issued fiat currency.

This is why we can't have nice things

Re:Another reason I'm not a Bitcoin thousandaire

[Actually, I do RTFA]

For security reasons, move your coins off the exchange right away. However, whenever people bring up the difficulty of cashing out when bitcoin goes into a freefall, the response is always that your coins will always be on the exchange so you won't have to wait in line to get coins out to transfer.

Hype or Something Else?

[Anonymous Coward]

I have now seen multiple stories of crypto-currencies getting stolen or exchanges hacked. Then I read about how blockchain is supposed to be the end all, be all, of transaction security. Aren't these things connected at some level? What am I missing? How can something that is supposed to so hack resistance as blockchain allow for the common theft of crypto-currencies?

This is not a facetious question. It seems like the press (old man here, so using an old man term for everything in the public I read) is either breathlessly in awe of this stuff or telling me that someone just lost millions of dollars. I honestly don't know what to believe.

Re:Hype or Something Else?

[ad454]

I have now seen multiple stories of crypto-currencies getting stolen or exchanges hacked. Then I read about how blockchain is supposed to be the end all, be all, of transaction security. Aren't these things connected at some level? What am I missing? How can something that is supposed to so hack resistance as blockchain allow for the common theft of crypto-currencies?

This is not a facetious question. It seems like the press (old man here, so using an old man term for everything in the public I read) is either breathlessly in awe of this stuff or telling me that someone just lost millions of dollars. I honestly don't know what to believe.

Crypto-currencies are secure at a mathematical level, regarding payment which is the transfer of funds from one wallet to another.

However payment involves compensation for the transfer of real-world assets, goods, and services, which is not covered (out-of-scope) of crypto-currencies, since regardless of how elegant the math is, there is simply no generic method to have any type of decentralized means of validating these real-world transfers. So we end up with a situation where "trusted" and "secure" 3rd party brokers are needed which act as crypto-currency intermediates between the buyer and seller, that can temporally hold the buyers purchase funds, in order to validate the transfer of real-world stuff from the seller to the buyer, before releasing the purchase funds to the seller.

Everything falls apart at "trusted" and "secure". Any 3rd party brokers will need to hold a large pool of crypto-currencies for purchases, and will need to have some type of online presence and infrastructure, which makes it a prime target for online attackers wanting to rob it. (In the same way that thieves target banks, because that is where the money is.) However time and time again we see that these 3rd party brokers are untrustworthy or incompetent, typically without even providing the minimum of security measures.

At the end of the day, this is where some government body (maybe from a different neutral country like Switzerland) will need to step up and implement some type of accreditation/certification of 3rd party brokers, that conform to the necessary regulation/protection and provide insurance protection, before crypto-currencies can really be trusted for transactions.

 

Re:Hype or Something Else?

[ceoyoyo]

Sounds like a good idea. Perhaps each country could certify their own brokers, but they'd all be connected through international agreements and treaties. Implement a system for transferring funds, owned and run privately but regulated by those same international agreements. You could call them, I don't know, banks or something.

Re:Hype or Something Else?

[king neckbeard]

The vast majority of the security problems seem to be with Bitcoin exchanges, who generally do a poor job. Bitcoin is technically quite secure, but it will always be vulnerable to social engineering.

Re:Hype or Something Else?

[khchung]

I have now seen multiple stories of crypto-currencies getting stolen or exchanges hacked. Then I read about how blockchain is supposed to be the end all, be all, of transaction security. Aren't these things connected at some level?

Yes, it is telling you this kind of cryptocurrency doesn't really work.

The most basic function of a "currency" is to settle payments, but transaction rate actually achievable (at least with the existing the Bitcoin) is so damn low that you simply cannot complete a transaction in reasonable amount of time, such as less than a minute.

So, to actually do transactions effectively, people have to store their Bitcoins in exchanges, so any transaction within the exchange will simply result in a change of record in the exchange's accounting system, completely bypassing the use of blockchain transaction.

Now, let that sink in for a moment.

A supposed "currency" cannot support the most basic transaction of its users, to the extend people have to setup exchanges so they can transact that "currency" effectively. Is that not a big enough flashing sign saying Bitcoin simply doesn't work as a currency at all?

And the people betting on Bitcoin continuing to rise? Just think about it, as the price of a Bitcoin rise to $50K, $100K, $1M, etc. Won't it eventually make more financial sense for every exchange to simply sell their coins and disappear? If they didn't get hacked first.

Think about, if you were operating such an exchange, wouldn't YOU start secretly selling the Bitcoins you kept for your users, and just wait for the perfect moment to disappear with the money?

Or if you are lucky, you might get hacked (so you blame all loses to the hacker) and declare bankruptcy (while hiding the money), or Bitcoin might just crash tomorrow so you can buy back all the coins with a tiny fraction of the money you took, then close off the exchange fair and square.

Think through this, and then realize how much of a fool you need to be to bet on making money buying Bitcoins.

Probably just the usual bad IT security

[gweihir]

Seriously, most targets, including banks, do not get successfully compromised only because nobody competent tries. All these bullshit hype exchanges were built fast, cheaply and motivated primarily by greed going strong and are very juicy targets, because unlike with basically all other targets, you can actually steal things directly over the Internet from them that are a (not very good, but still) approximation to money.