Bitcoin Dips Below $7,000 & Rebounds Sharply, Upbit Crypto Exchange Loses $50mln. to Hackers

Bitcoin (BTC) dropped below $7,000 earlier today, but reversed sharply on new reports related to Upbit hacking allegedly by insider. Data from Coingecko shows that BTC/USD fell sharply to $6,844 before bouncing back sharply to hit $7,362.

At the time of writing this article, Bitcoin was trading at $7,266.90. The volatility was paralleled by news reports of dubious activity at popular South Korean cryptocurrency exchange Upbit.

Specifically, altcoins worth $50 million seems to have been transferred rapidly, triggering concerns of a likely hacking incident.

In this regard, Upbit issued an official statement that seems to admit theft of funds. The cryptocurrency exchange has already stopped processing deposits and withdrawals. Initial reports indicate that Upbit has lost 342,000 Ether (ETH), worth $50 million, in the theft.

Upbit issued the following statement:

“At 1:06 PM on November 27, 2019, 342,000 ETH (approximately 58 billion won) were transferred from the Upbeat Ethereum Hot Wallet to an unknown wallet. Unknown wallet address is 0xa09871AEadF4994Ca12f5c0b6056BBd1d343c029.”

Upbit has further pointed out that only the transfer of 342,000 ETH is the only dubious trade on the ledger. It has clarified that other large transactions were linked to the movement of crypto assets by the exchange, between hot and cold storage wallets.

Lee Seok-woo, CEO of parent company Dunamu, announced that any loss to investors will be compensated by the cryptocurrency exchange, but will take at least two weeks for the clients to gain control over their balances.

Lee Seok-woo wrote “To ensure that your assets are harmed, 342,000 ETH transferred to unknown wallets will be covered by upbit assets.”

Even though the price of Bitcoin fell, many of the cryptocurrency traders were not convinced that Upbit hacking incident was the primary reason for Bitcoin price decline.

Joseph Young, contributor to Cointelegraph in South Korea, noted “I actually do not think the UPbit incident is moving down the price of bitcoin because it shouldn’t really. UPbit is covering for all losses. If it is related, it would be that the ‘hacker’ is selling it, which is difficult to do it so quickly after the incident.”

The cryptocurrency market has already turned volatile this week after authorities in Beijing began to take action against businesses dealing in cryptocurrencies. Investors started winding down their position with the hope of re-entering later at a lower price.

Lack of liquidity and tax related issues are also believed to be the reasons for the increase in volatility. Most of the altcoins, however, did not decline sharply following the news of Upbit hacking. Ether (ETH) dropped to $141.65, before rebounding to $150.26, reflecting a gain of 1.7%.

Likewise, Bitcoin SV (BSV) dropped to $100.68, before reversing to $107, representing a gain of 1.2% in the past 24 hours.

The overall crypto market cap stood at $197.50 billion, with Bitcoin dominance ratio at 66.4%.

Regarding the hacking incident, some crypto enthusiasts have raised doubt that the hacking is basically an insider job.

Whale Alert, which tracks large crypto transfers, has pointed out that 342,000 ETH transfer was followed by a chain of notable transfers of BitTorrent (BTT) and Tron (TRX) tokens.

Furthermore, the ETH, BTT and TRX tokens were moved to an unidentified wallet. This was followed by the transfer of Stellar (XLM), EOS and OMG tokens from Upbit to cryptocurrency exchange Bittrex.

On the basis of Upbit’s statement, Young argues that an employee of the exchange could have orchestrated the theft by taking advantage of the timing of storage transfers.

Following the news of hacking, Binance CEO Changpeng Zhao has tweeted that his exchange will “work with Upbit and other industry players to ensure any hacked funds that may make their way to Binance are immediately frozen.”