Breaches in spotlight as problems hit two cryptocurrency exchanges

Breaches in spotlight as problems hit two cryptocurrency exchanges

Breaches in spotlight as problems hit two cryptocurrency exchanges As the torrent of investor interest continues to rage for Bitcoin, two cryptocurrency exchanges suffered problems this week, with one forced into bankruptcy as a result.

In South Korea, the Yapian-operated Youbit exchange suspended trading following a cyberattack that caused it to lose 17% of its assets, reported the Financial Times. The attack, which occurred on Tuesday, came eight months after another cyber breach of the exchange in April, according to local media reports.

Launched in 2013, Youbit facilitates trading of 10 digital currencies, including Bitcoin and Ethereum. The exchange said investors could redeem about 75% of their digital coin; the remainder would be paid after Yapian completes its bankruptcy process.

Meanwhile, San Francisco-based Coinbase, which maintains one of the world’s largest cryptocurrency platforms, announced an investigation into possible misconduct after a drastic surge in the price of Bitcoin Cash, reported the Wall Street Journal.

At 7 PM ET on Tuesday, Coinbase advised its users that it would allow trading in Bitcoin Cash on its GDAX platform later that evening. As soon as the platform started accepting such trades, the cryptocurrency’s price surged to US$9,500 on GDAX — more than triple compared to other exchanges.

Four minutes after Bitcoin Cash trading began on GDAX, Coinbase halted the service; the company said it would remain offline until Wednesday, 12 p.m. Eastern Time. Hours after the halt, the company said it would look into whether any of its employees, contractors, or their friends and family used confidential information about its plans before they were made public.

According to data from CoinMarketCap, Bitcoin Cash had undergone a 28% price increase in the 24 hours preceding Coinbase’s initial announcement. In the 75 minutes before trading was activated on GDAX, there was another rise of 20%. The launch was also thought to cause a US$2,000 decrease in Bitcoin prices to US$15,700, which was reversed shortly afterward.

The movements in the price of Bitcoin Cash have prompted some speculation of front-running by individuals who may have had advance knowledge of Coinbase’s plans. In a recent blog post, Coinbase said its employees “have been prohibited from trading in Bitcoin Cash for several weeks.”

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