Upbit Is in Jeopardy under the Hacking

Upbit used virtual assets and cash to cover stolen Ethereum

The virtual assets held by Dunamu, the operator of Upbit, decrease significantly last year. This is due to a hacking incident that occurred last year.

According to Dunamu’s 2019 audit report published on DART system (Data Analysis, Retrieval and Transfer system) of Financial Supervisory Service, the total amount of virtual assets held by Dunamu last year was 10.9 billion won. This is a 66% decrease from 32.3 billion won in 2018.

The number of coins shows a clear decreasing trend. Bitcoin (BTC), which was 4632 in 2018, decreased to 193 last year, and Ethereum (ETH) decreased from 1949 to 569. Other coins decreased from 7428 to 4359. However, Tether (USDT) slightly increased from 4220 to 4447.

The reason why the virtual assets have drastically decreased is the hacking incident that occurred in November last year. Upbit has been stolen 342,000 (about 58 billion won) of ETH and covered the losses with its own assets. In the audit report, Dunamu said, “This due diligence of assets reflects the number of cryptocurrencies lost in December 2019.”

As of the end of 2018, Upbit had only 1949 of ETH, so it made up for losses by purchasing ETH with virtual assets and cash. Dunamu said, “Upbit did not have enough ETH at that time. Therefore, we used all the available assets to cover the stolen ETH.”

Upbit’s cash and cashable assets last year fell from 458.3 billion won to 311 billion won. The expenses used to cover the stolen ETH were treated as non-operating expenses in the audit report. Excluding financial expenses, the non-operating expenses of Dunamu last year were 67.4 billion won. Expenses for the covering of ETH worth 58 billion won are the largest portion of non-operating expenses.

At the end of last year, when the audit report was prepared, the price of virtual assets increased compared to 2018, and virtual asset profits increased from 16.4 billion won to 26.6 billion won. The loss of virtual assets decreased from 96.4 billion won to 6.3 billion won.

The details of virtual assets of users stored by Dunamu were not disclosed in this audit report. However, Upbit regularly releases a report on ‘due diligence of cryptocurrency and deposit’. According to a report released in January, Upbit holds approximately 100.83% of virtual assets based on the amount of money to be paid to the customers. In addition, it holds 144.45% of money based on the amount of money to be paid to the customers

Kim Ka-young(2020.04.20) 업비트, ‘해킹 탓’ 지난해 가상자산 보유분 3분의 1토막
retrieved from https://paxnetnews.com/articles/59581