UPbit confirms the theft of ETH
Security

UPbit confirms the theft of ETH

By Marco Cavicchioli - 27 Nov 2019

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UPbit officially confirmed the theft of 342,000 ETH, worth 58 billion won (almost 50 million dollars). 

This was revealed by Lee Seok-woo, the CEO of the company Doo-myeon that manages the exchange, admitting that this is the reason for the suspension of deposit and withdrawal operations

UPbit is a Korean exchange, active mainly in South Korea, Indonesia and Singapore. According to CoinMarketCap it has a daily volume of about 130 million dollars, so the theft could have a significant impact on its operation. In addition, ETH/KRW is the third-largest trading pair, with a daily volume of just $13 million. 

Lee Seok-woo apologises for the inconvenience, and also reveals that the theft occurred at 13:06 local time on November 27th, 2019, when precisely 342,000 ETH were transferred from the Ethereum Hot Upbeat wallet to an unknown wallet, 0xa09871AEadF4994Ca12f5c0b6056BBd1d343c029

The CEO says that, to safeguard clients’ funds, missing ETH will be covered by UPbit assets, but he does not reveal which assets or in what quantities. In the meantime, all funds held by the exchange have been transferred to cold wallets. 

It is estimated that it will take at least two weeks to resume the deposit and withdrawal service

This is not the first time that an exchange was the victim of a theft. For example, in May, 7,000 BTC were stolen from Binance, for an equivalent value of 41 million dollars at the time. Binance managed to cover the lost funds with its own funds and those from the insurance. 

Note that Binance, for example, has a daily volume of over $1 billion, so it was certainly less difficult to make up for a $41 million theft. 

In other cases, however, even for smaller amounts, it was not possible to cover the loss and some exchanges were forced to close without being able to return all the funds to their customers. 

In the case of Cryptopia, a 16 million theft was enough to send the exchange into crisis. 

For UPbit the shortfall of about 50 million dollars could be problematic to cover, especially since it is not yet known whether it has insurance to cover this type of theft

Over the next few days, there will certainly be more information, although the two weeks of suspension of deposits and withdrawals do not seem to be a good sign

In fact, if the exchange does not find sufficient funds to cover the loss, it will be forced to deny its users the opportunity to regain possession of all their funds and thus the procedure of liquidation of the company would start, with obvious inconveniences for customers. 

It is still too early to understand with certainty what will happen and if it will be possible for UPbit users to regain possession of all their funds. 

 

Marco Cavicchioli
Marco Cavicchioli

Class 1975, Marco teaches web-technologies and is an online writer specializing in cryptocurrencies. He founded ilBitcoin.news, and his YouTube channel has more than 11 thousand subscribers.

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