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Upbit loses 58 billion won of ethereum

Local cryptocurrency exchange Upbit has lost track of 58 billion won ($49.2 million) of cryptocurrency. “342,000 ethereum tokens were transferred from an ethereum hot wallet to an unknown wallet,” said Upbit operator Dunamu’s CEO Lee Sirgoo in a statement. A hot wallet is an online cryptocurrency storage system, as opposed to a cold wallet, which is offline. He ensured customers that only the ethereum transfer was affected. The company has limited deposits and withdrawals. The announcement has raised questions over whether the transfer was the result of a hack. Losses will be covered by the company Upbit said the lost tokens will be replenished through the company’s assets. “The ethereum that was transferred to an unknown address will be covered by Upbit,” said Lee. “It will likely take at least two weeks for withdrawals and deposits to go back to normal operations.” The crypto community believes it’s a hack Much of the focus on the announcement has been on whether it was a hack into the exchange. Hot wallets are known to be less secure than cold wallets, which are generally used for large sums of cryptocurrency. “If assets are all stored in cold wallets, there could be problems in terms of liquidity during an emergency,” said a cryptocurrency industry source. “Generally, 30 percent of assets are stored in hot wallets. The ethereum transfer at Upbit could be seen in that context.” No mention of a hack The Upbit statement, however, did not mention a hack at all, leading to more questions. Tarophin, a power blogger on cryptocurrency, believes it’s too early to call the incident a hack. “The media has rushed to call it a hack after seeing the statement,” said Tarophin, calling for more fact checking. “Upbit said the ethereum was sent to an unknown wallet but did not mention a hack.” “In July 2018, when there was a similar incident at Upbit, the company called it a hack,” explained the blogger. “We should think about the statement’s expression of an ‘unknown wallet’ rather than a hack.” Conspiracy theories The majority of the cryptocurrency community wasn’t surprised by the Upbit announcement, seeing it as just the latest in the continuing deposit restriction saga at cryptocurrency exchanges. Some cryptocurrency forums suggested that the transfer could have been made by Upbit itself to offset tax payments. Currently, companies face corporate taxes of 25 percent if they have over 300 billion won in operating profit. Considering Upbit’s operating profit of 300 to 400 billion won last year, the company would have to pay around 60 to 70 billion won in taxes, a similar amount to the latest losses.

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