$2 650 000 USD

DECEMBER 2017

SOUTH KOREA

YOUBIT

DESCRIPTION OF EVENTS

“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.” "The cyber attack is the second for Youbit, previously known Yapizon. The exchange was previously targeted in April in an attack which South Korean officials believe was conducted with the support of neighboring North Korea. Recent reports indicate that intelligence services in South Korea suspect that North Korea is behind additional attacks against domestic cryptocurrency exchanges, including market-leader Bithumb." “Yapian obtained a DB Cyber Comprehensive Liability Insurance policy just 20 days before it declared bankruptcy” “DB Insurance, one of South Korea’s biggest property-and-casualty insurers, has denied the claim of 3 billion won (~USD$2.65 million) by Yapian, the operator of Youbit” “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.” “But, to claim the rest of the funds, the company stated that investors will have to wait until the final settlement of bankruptcy proceedings.” “Unfortunately, for Youbit investors, it may take several months to years to receive the remaining 25 percent of their personal funds, as the settlement of bankruptcy proceedings will have to be finalized before the company can credit its customers.” “The hack has been attributed to North Korean hackers” “While the investigation could take “weeks” to review the malware code, “the people said there were telltale signs and historical evidence that North Korea was behind the Youbit attack,” the news outlet detailed.” “According to Yonhap, the rights and duties related to the personal information of Youbit members and all assets were transferred to Coinbin on March 21.”

Details appear to have been slow to come out on this hack, which took place right after a government security inspection by South Korea. It appears to be some kind of malware which was installed on the operation. Youbit had been previously hacked in April, and would again suffer issues as CoinBin in the future. The exchange filed for insurance, but this was denied, causing them to file for bankruptcy, before eventually being purchased by another exchange CoinBin. This highlights the importance of using air-gapped multi-sig cold storage, where any transactions are signed in an isolated environment and a breach requires all parties to sign off. Had this been employed for the vast majority of funds, and a self-insurance model been employed for the narrow percentage of hot wallets, the bankruptcy would have been avoided.

Sources And Further Reading

 For questions or enquiries, email info@quadrigainitiative.com.

Get Social

  • email
  • reddit
  • telegram
  • Twitter

© 2021 Quadriga Initiative. Your use of this site/service accepts the Terms of Use and Privacy Policy. This site is not associated with Ernst & Young, Miller Thompson, or the Official Committee of Affected Users. Hosted in Canada by HosterBox.