Another exchange is hacked, and another selloff follows. It’s turning into a regular ritual in crypto land—if one sees a big drop in cryptocurrencies, merely google the words “bitcoin selloff” and “Korea” and you’ll get the news right away.
This time, Coinrail was hit with a $40 million hack over the weekend, leading to a 10+ percent drop in bitcoin prices, along with others in the cryptocurrency complex.
PANIC! PANIC! PANIC! PA—wait, what’s Coinrail?
Quite frankly, we never heard of it. And neither have most people. It’s an insignificant exchange out of South Korea. Its volume doesn’t even show up on, say, CoinMarketCap or other sites when it comes to bitcoin trading.
On Saturday, Coinrail tweeted out to its 4,000 or so followers that—wait, what? We may not have a booming social media presence at the moment but Coinrail’s Twitter follower count is roughly equal to the average American kid in high school. They tweeted something out but who even saw it?
Anyway, back to our discussion. Coinrail tweeted this out:
해킹공격시도로 인한 시스템 점검중입니다. 일부코인(펀디엑스,NPXS)이 확인되었으며 추가적인 코인피해가 있는지 여부를 확인중입니다. 추후 자세한 사항은 재공지하겠습니다 / There has been an cyber intrusion in our system. We're confirming it and some coins(Pundi X, NPXS) are confirmed.
— coinrail (@Coinrail_Korea) June 10, 2018
For those whose Korean may be shoddy, here’s the translation:
“System checkup due to attempted hacking attack. Some coins (Pundy x, NPXS) have been confirmed and are being checked for additional coin damage. Further details will be reposted/There is a been an cyber intrusion in our system. We’re confirming it and some coins (Pundi X, NPXS) are confirmed.”
OH NO!!! WE MUST SELL BITCOIN NOW!!! THIS IS THE END!!! THIS IS—Hold up, did Coinrail even say bitcoin?
Nope. A handful bunch of no-name coins were hacked but the algos and hometraders who read “hack,” “cryptocurrency exchange,” and “South Korea” all in one sentence freaked out and sold.
In other words, this whole selloff was based on b.s. Except maybe not.
Coinrail may have fewer Twitter followers than a Jersey Shore cover band and it may have fewer customers than a drug dealer selling illegal prescription drugs to Upper East Side moms, but it’s a crypto exchange. And there’s still a crisis in confidence when it comes to where and how cryptocurrencies are traded.
Perhaps, then, Coinrail is serving as a proxy for all the fears the market still has when it comes to the largest exchanges. Are they as legit as they claim? Are they free from hacks? When will we see an audit?
In that way, this weekend’s selloff told us much more about the market than Coinrail itself ever could.