Hack Costs South Korean Yapizon Bitcoin Exchange $5 Million

Little-known bitcoin exchange suffered huge losses and ‘Fei’ token compensation offer outraged customers.

Yapizon, a cryptocurrency exchange based in South Korea was forced to admit last week, that an unknown hacker or group of hackers had been able to compromise its systems and steal over 3,800 bitcoin, currently valued at around $5 million. Yapizon have said the theft has accounted for roughly 37% of the company’s total assets.

The Yapizon home page on May 3rd, 2017. Google Translate will do the job if you’d like to read it in English.

In a humbling, yet lengthy statement, posted to its website landing page, Yapizon informed its investors and users that hackers had successfully managed to hijack four separate digital wallets in the small hours of April 22nd.

All Yapizon bitcoin holders to take the hit

Yapizon’s response to the hacks has been to spread its losses equally among all its bitcoin accounts, to apparent outrage from those users who were not affected by the security breach.

Every Bitcoin account or, wallet, on the Yapizon exchange will have the same proportional amount deducted from its balance to cover the losses. The company will then issue ‘Fei’ tokens to each affected user that will over a period of time be bought back by Yapizon using company profits.

In the long term, that should mean that no-one will lose out. In the short term however, users will suffer their balances being reduced by around 37%, the same approximate amount as was stolen, to compensate the hacked wallets.

The Bitfinex legacy

Yapizon’s token ‘token’ effort is not the first of its kind. The Bitfinex exchange in Hong Kong lost $72,000,000 in a major hack last year. To recover their users lost funds, the exchange used a similar program to recover their bitcoin investors funds. The company has since then, been gradually buying the Bitfinex tokens back to reimburse investors losses.

Back to Yapizon

Yapizon can take some credit for the fact that so far, it seems that only their bitcoin depositories appear to have been affected. Information such as names, addresses, ID logins, passwords credit card details and emails have seemingly not been affected. Yapizon have said that that data is stored on separate servers and is fully encrypted. But then why steal someone’s identity when you can steal millions of dollars in untraceable currency. I’m just saying.

At the beginning of April this year officials from Bitfinex said the company had raised enough funds to reimburse all members impacted by the cyberattack. The Yapizon exchange is still offline as of the time of writing, while its engineers rebuild a more secure system.