QUADRIGA INITIATIVE
CRYPTO WATCHDOG & FRAUD RECOVERY PLATFORM
A COMMUNITY-BASED, NOT-FOR-PROFIT
$5 300 000 USD
APRIL 2017
SOUTH KOREA
YAPIZON
DESCRIPTION OF EVENTS
“A South Korean bitcoin exchange called Yapizon was hacked for 3816 BTC or roughly $5.3 million USD worth of bitcoins on Saturday, April 22.” “In a notice on Saturday translated on social media, staff confirmed the theft of 3,831 Bitcoins, “equivalent to 37.08% of the total assets.”” “According to the bitcoin exchange Yapizon, four of the company’s hot wallets were compromised on April 22, between 2:00 to 3:00 in the morning.” “by an unknown group of hackers” “South Korea's Internet and Security Agency (Kisa)” “blamed the … attack … on cyber-spies working for North Korea.” “[T]he company has denied that any insider was involved in the event.” "Appearing to follow in the footsteps of fellow exchange Bitfinex after its hack last year, Yapizon said it would dock remaining customer balances by the same amount to spread the burden of the losses." “After many discussions, legal and accounting consultations and reviews, we have come to the conclusion that it should be applied fairly to all members. It is also the most common way to go through the liquidation process. The loss of 37.08% will have the same effect on all members' assets.” “Interim measures make reference to a sequential payment scheme where users will be repaid in so-called “fei” tokens, but the process appears overly convoluted.” “As seen in the security breach of Ethereum investment fund DAO that resulted in the loss of 3.6 million ETH and the hacking attack of Bitfinex which ultimately led to the loss of $70 million, Yapizon can certainly recover from the recent hacking attack. Yapizon entered the cryptocurrency industry four years ago and it is expanding services and operations rapidly across the region. From January to March of this year, Yapizon generated over $325,000 in profit and the company projects a total profit of $1.8 million by the end of 2017. If customers trust in Yapizon and its practices, the company believes it can make up for the losses of all customers relatively soon,” “However, this move is controversial because of the difference in the financial status of Bitfinex and Yapizon.”
Yapizon had 37% of customer assets stored in hot wallets, which was more than 3 times the company’s annual revenue. The primary difference between Bitfinex and Yapizon is that Yapizon asked customers to “trust” in its practices, while Bitfinex made important security changes based on the breach. Yapizon focused on marketing by changing their name to Youbit, while nothing appears to have been changed to actually address the breach. As a result, the same service (now called Youbit) was again hacked before they could make any significant repayments, and losses of the subsequent hack were even larger. (You’ll see them again shortly in this list.)
100 Crypto Thefts: A Timeline of Hacks, Glitches, Exit Scams, and other Lost Cryptocurrency Incidents (Jan 25)
Bitcoin Scams and Cryptocurrency Hacks List - BitcoinExchangeGuide.com (Mar 5)
Korean Bitcoin Exchange Yapizon Confirms $5 mln Hack, All Customers To Pay With Balances (Mar 7)
Hacked South Korean Bitcoin Exchange Yapizon Offers IOUs | Featured Bitcoin News (Mar 7)
$5 Million Hacked From South Korean Bitcoin Exchange, Issues Bitfinex-Like Tokens (Mar 7)
South Korean Bitcoin Exchange Yapizon Hacked; $5 Million Stolen (Mar 7)
SlowMist Hacked - SlowMist Zone (Jun 26)
