[THE INVESTOR] The Korean government on June 21 launched a probe into the latest hacking attack on Bithumb, the country’s largest cryptocurrency.

The Ministry of Science and ICT and Korea Internet & Security Agency sent officials to Bithumb’s Seoul headquarters to collect records and data from computers to investigate the incident in which the exchange lost 35 billion won (US$31.50 million) worth of cryptocurrencies. 

The government will also check the security system and whether Bithumb is taking measures to reinforce its cybersecurity as was recommended in April. After a checkup of the security systems of 21 cryptocurrency exchanges from January to March, the government concluded that most companies including Bithumb had many weaknesses and ordered them to implement supplementary measures.

The attack on Bithumb, which took place between late night on June 19 and early morning the next day, came less than two weeks after the minor exchange Coinrail lost digital money worth around 40 billion won.

Bithumb, the first major exchange to come under cyber theft, has not elaborated on the types of stolen cryptocurrencies and said it would reveal information after the investigation wraps up.

The company which deals with more than 470 billion won in daily transactions said in the statement that it plans to compensate all the losses with its own funds in the statement and that all assets of customers are saved in its cold wallet where the assets are stored offline.

Over the past 14 months, the total amount of damages by four hacking attacks on cryptocurrency exchanges stood at 97.7 billion won, but few customers have received due compensation, according to the authorities.

The hacking attack on Bithumb highlights the soundness of the company’s cybersecurity. In April last year, the company suffered a cyberattack that led to the leakage of sensitive personal data of 31,506 users and theft of 4,900 Bithumb accounts. In December 2017, in its first punitive action against a crypto exchange, the Korea Communications Commission imposed fines totaling 60 million won after concluding that Bithumb’s lax cybersecurity contributed to those incidents.

Despite raising concerns over cryptocurrency exchanges in the country, the price of cryptocurrencies appeared to be recovering from earlier losses that followed the news of the hacking incident. Bitcoin was up 4 percent to 7.42 million won as of 2:20 p.m. while Etherum was up 5 percent to 591,500 won, according to Bithumb.

By Park Ga-young (gypark@heraldcorp.com)