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South Korea students dive into virtual coins, even as regulators crack down

by UNTV News   |   Posted on Tuesday, January 2nd, 2018

A university student, a member of a club studying cryptocurrencies, attends a meeting at a university in Seoul, South Korea, December 20, 2017. Picture taken on December 20, 2017. REUTERS/Kim Hong-Ji

SEOUL (Reuters) – Hackers have stolen millions, lawmakers are pushing for new taxes and regulations, and a leading financial official has called them a “Ponzi scheme”.

But that hasn’t cooled a frenzy for bitcoin and other virtual currencies that is gripping young investors in South Korea.

On a recent weeknight at Sungkyunkwan University in Seoul, more than a dozen students crammed into a classroom to share tips on investing in so-called cryptocurrencies, which have driven tales of fantastic returns for savvy investors.

The group sat in rapt silence – broken only by a sudden shout of “there was just a big jump!” from someone monitoring his virtual currencies – as one student gave a presentation on how to read financial data and predict future trends.

“I no longer want to become a math teacher,” said 23-year-old Eoh Kyong-hoon, who founded the club, Cryptofactor. “I’ve studied this industry for more than 10 hours a day over months, and I became pretty sure that this is my future.”

Driven in part by a dismal economic outlook – including an unemployment rate almost three times the national average – young South Koreans are flocking to virtual currencies despite the risks and warnings from officials, analysts say.

It’s a trend that has caught the eye of South Korean leaders and regulators, who announced new measures this week to regulate speculation in cryptocurrency trading within the country.

Concerns about security and thefts of cryptocurrencies by hackers have also been rising. A South Korean cryptocurrency exchange recently shut down and filed for bankruptcy after being hacked for the second time this year.

“Young people and students are rushing into virtual currency trading to earn huge profits in just a short period of time,” Prime Minister Lee Nak-yeon said in November. “It is time for the government to take action as it could lead to serious pathological phenomena if left unchecked.”

UNCHECKED ENTHUSIASM
Eoh said the talk of more regulation had not dented his plans, especially after making what he said was a 20-fold gain on his investments over the past six months.

He said that many students were bringing laptops to class to track the movements of their investments and participate in actual trading. “Even when professors are giving lectures right in front of them,” he said.

Younger investors have especially gravitated toward so-called “altcoins”, or virtual currencies other than bitcoin, which often trade at much lower values, analysts say.

“Since young people are more mobile-friendly, they can actually make more out of altcoin investments as long as they are able to discriminate gems from pebbles,” said Kim Jin-hwa, one of the leaders of the Korea Blockchain Industry Association, an association of 14 virtual currency exchanges.

Iota, one of the fast-gaining altcoins, was traded at $0.82 in late November, but now stands at $3.89, a gain of 374.4 percent, according to Coinmarketcap.com. Energo (TSL), another type of altcoin, gained 400 percent during the same period.

Some young investors say they don’t sleep until after 2 a.m., when there is a lull in the cryptocurrency markets as investors in places like South Korea and Japan log off.

Members of the club say they call each other to make important decisions together, and see information sharing as key to navigating the volatile cryptocurrency markets.

“I literally knew nothing about cryptocurrencies or the economy,” said Lee Ji-woo, a 22-year-old sports industry major. “Everyone here has taught me a lot.”

It’s now emboldened her to dream of a different future.

“I can have two jobs maybe, one as an athlete and another as an investor,” she said.

ECONOMIC DRIVERS
Intense competition for jobs in South Korea is likely helping to drive interest in virtual currencies among young South Koreans, especially as they see others reaping big gains, said Shin Dong-hwa, head of the Korea Blockchain Exchange.

“Whenever they go onto social network services, they are easily exposed to so many examples of young people around their age earning huge money,” he said.

But some in South Korea’s financial establishment say those hopes may be unfounded.

Kim Yong-beom, vice chairman of the Financial Services Commission, said Monday that the only reason prices were going up was because each investor expected the next buyer down the line to pay a higher price. “That really is a Ponzi scheme,” he said.

Others say students seem more focused on ways to get rich quick rather than on the underlying financial or technological values of digital currency.

“There’s no way to measure their true value yet but students are just going for them, believing that they can earn a big fortune in just a snap,” said Yun Chang-hyun, economics professor at the University of Seoul.

Members of Cryptofactor, however, say they founded the club because of a lack of dedicated cryptocurrency classes on campus and see their efforts as a way to move beyond speculation to informed investing.

“I realised that I was actually speculating rather than investing before I came to this club,” said Kim Myung-jae, a 19-year-old fine arts student, adding that she was especially attracted to altcoins.

“Now that I fully discuss which one to invest in with the members, I‘m actually looking at the true value.”

Additional reporting by Yuna Park, Cynthia Kim; Writing by Josh Smith; Editing by Philip McClellan

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Cryptocurrency traders to launch lawsuit against Coincheck on Thursday – lawyer

by UNTV News   |   Posted on Wednesday, February 14th, 2018

Cryptocurrency exchange Coincheck’s signboard is pictured in front of a building where their office is located in Tokyo, Japan February 2, 2018. REUTERS/Kim Kyung-Hoon

TOKYO (Reuters) – A group of cryptocurrency traders will file a lawsuit against Coincheck Inc on Thursday over last month’s theft of $530 million (£382 million) in digital money from the Tokyo-based exchange, a lawyer representing the claimants said.

The ten traders will file the claim at the Tokyo District Court over Coincheck’s freezing of cryptocurrency withdrawals, Hiromu Mochizuki, a lawyer representing the plaintiffs, told Reuters.

The traders will request that Coincheck allows them to withdraw cryptocurrencies to “wallets” – folders used for storing digital money – outside the exchange, Mochizuki said. The group may launch a second lawsuit at the end of the month to claim for damages over the heist, he added.

Coincheck representatives did not immediately respond to phone and emailed requests for comment.

The Coincheck incident highlighted the risks in trading an asset that policymakers are struggling to regulate, and has renewed the focus on Japan’s framework for overseeing these exchanges.

The Tokyo-based exchange, which froze all withdrawals of yen and digital currencies following the theft, resumed yen-withdrawals from Tuesday, according to posts on Twitter.

Coincheck said on Friday it would allow customers to withdraw yen after confirming the integrity of its system security. It added it would keep restrictions on cryptocurrency withdrawals until it could guarantee the secure resumption of its operations.

Coincheck is set to file on Tuesday a report with regulators on the heist, the safety of its systems, and measures it will take to prevent a repeat.

Reporting by Thomas WilsonEditing by Shri Navaratnam

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Russia says hackers stole more than $17 million from its banks in 2017

by UNTV News   |   Posted on Wednesday, February 14th, 2018

FILE PHOTO: A man types on a computer keyboard in Warsaw in this February 28, 2013 illustration file picture. REUTERS/Kacper Pempel

MAGNITOGORSK, Russia (Reuters) – Hackers stole more than 1 billion roubles ($17 million) from Russian banks using the Cobalt Strike security-testing tool in 2017, a central bank official said on Tuesday.

Russia is under intense scrutiny over cyber crime following allegations hackers backed by Moscow have attacked targets in the United States and Europe, accusations the Kremlin has repeatedly denied.

Russian authorities are now keen to show that Russia too is a frequent victim of cyber crime and that they are working hard to combat it.

Central bank Deputy Governor Dmitry Skobelkin told an information security conference in the Russian city of Magnitogorsk that 21 “waves of attacks” using Cobalt Strike had been recorded in 2017.

“More than 240 credit organizations were hit by the attacks, 11 of which were successful. The amount stolen was more than 1 billion roubles,” he said.

Cobalt Strike is a security tool used to test the strength of an organization’s cyber defenses, but it has also been used by hackers to attack banks in Russia and Europe.

A group known as Cobalt because of their use of the tool attacked cash machines in more than a dozen countries in 2016, using the malicious software to force the ATMs to spit out cash.

Skobelkin said the Russian central bank had sent warnings to more than 400 organizations which were targeted by the Cobalt group last year.

($1 = 57.8102 roubles)

Reporting by Jack Stubbs; Editing by Katya Golubkova and Susan Fenton

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Japan’s Coincheck reports to regulators over $530 million cryptocurrency heist

by UNTV News   |   Posted on Tuesday, February 13th, 2018

FILE PHOTO: Journalists are seen next to Cryptocurrency exchange Coincheck’s signboard while Japan’s financial regulator conducts a spot inspection on Coincheck, in Tokyo, Japan February 2, 2018. REUTERS/Kim Kyung-Hoon/File Photo

TOKYO (Reuters) – Japanese cryptocurrency exchange Coincheck Inc, under pressure to better safeguard investors after the daring theft of $530 million (£382 million) of digital money last month, said it had on Tuesday filed a report with regulators on the hacking.

The Financial Services Agency ordered Coincheck to raise its standards after the late-January hack, directing it to submit a report on the security of its systems and measures it would take to prevent a repeat.

The report included Coincheck’s investigation into the heist and details of steps to bolster its risk management system, the exchange said in a statement.

The submission of the report came as Coincheck lifted curbs on yen withdrawals.

The exchange, which froze all withdrawals of yen and cryptocurrencies following the heist, said last week it had confirmed the integrity of its system security and would from Tuesday allow customers to withdraw yen. A source told Reuters on Friday that Coincheck had received withdrawal requests from customers totalling about 30 billion yen (£202 million).

The exchange will hold a press conference at 8 p.m. local time (1100 GMT), the person familiar with the matter said. Coincheck did not immediately respond to an emailed request for comment.

The heist has exposed flaws in Japan’s system of regulating cryptocurrency trading, and raised questions over the country’s dash to oversee the industry – a move that was in sharp contrast to clampdowns by policymakers in countries such as South Korea, China and India.

LAWSUIT

Despite allowing customers to resume withdrawing yen from its systems, Coincheck said last week it would keep in place curbs on cryptocurrency withdrawals until it could guarantee the secure resumption of its operations.

“We are continuing to confirm and improve the security of our systems in order to resume transfers of other cryptocurrencies,” Coincheck said.

A lawyer representing a group of ten cryptocurrency traders told Reuters that they will launch a lawsuit against Coincheck on Thursday over the curbs on taking out cryptocurrencies.

The group will file a claim at the Tokyo District Court for Coincheck to allow withdrawals to private “wallets” – digital folders for storing money – outside the hacked exchange, the lawyer, Hiromu Mochizuki, said.

Separately, Bank of Japan Governor Haruhiko Kuroda said on Tuesday cryptocurrencies likely won’t threaten legal tenders like the yen any time soon as they are mostly used for speculative trading, rather than as payments and settlement means.

Kuroda also said the BOJ was closely watching developments in cryptocurrency trading to ensure they do not erode public trust over the safety of existing settlement systems overseen by the central bank.

“Cryptocurrencies aren’t legal tenders and don’t have assets to back up their value,” the BOJ chief said.

Reporting by Takahiko Wada and Thomas Wilson; Additional reporting by Leika Kihara Editing by Shri Navaratnam

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