Legal Perspective on the GDAC Hacking Case
Host: Reporter Jang Se-jin
Guest: Attorney Hong Puren, managing partner at Decent Law Firm
Q. What are the details of the hacking incident involving the cryptocurrency exchange ‘GDAC’?
- Cryptocurrency exchange GDAC suffered a hacking incident with 20 billion KRW in losses, equivalent to 23% of its stored assets.
Q. Are there any past examples of cryptocurrency exchange hacks?
- Mt. Gox in Japan went bankrupt after 850,000 Bitcoins were stolen.
Q. What is Mt. Gox?
- Mt. Gox was initially a card trading platform and later transitioned to Bitcoin operations.
- Established in 2011, Mt. Gox saw Bitcoin priced at $1 per coin at the time.
- Mt. Gox was a platform that allowed the exchange of Bitcoin for cash.
- It handled over 70% of the world's Bitcoin transactions at its peak.
Q. What happened during the Mt. Gox hacking incident?
- 850,000 Bitcoins were stolen from Mt. Gox in Japan.
- The Mt. Gox incident was a theft, not a hack.
- Concerns over the instability of Bitcoin and blockchain arose, causing a massive drop in Bitcoin's price.
Q. Are there any inherent issues with Bitcoin or blockchain technology?
- "It is practically impossible to manipulate Bitcoin or blockchain."
Q. If someone gains control of the majority of nodes, could they manipulate the system?
- "Anyone who holds power over Bitcoin is unlikely to do anything that would devalue it."
Q. After Mt. Gox’s bankruptcy, was there any compensation for the losses?
- Mt. Gox began distributing Bitcoin compensation to its creditors.
- "There was controversy over the basis for Bitcoin’s market value used for compensation."
Q. Are there other hacking cases involving cryptocurrency exchanges?
- Binance experienced a hack where 7,000 BTC were stolen.
Q. Have there been domestic hacking incidents involving cryptocurrency exchanges?
- Both Upbit and Bithumb have had hacking incidents.
- "Thorough security measures are essential."
Q. What are the common types of hacking targeting cryptocurrency exchanges?
- Cryptocurrency wallets manage "private keys vs. public keys."
- There have been cases where exchanges had their private keys stolen, leading to coin withdrawals.
Q. How are private keys vs. public keys stored?
- Hot wallets (cryptocurrency wallets) are convenient for deposits and withdrawals but are "vulnerable in terms of security."
- Cold wallets store private keys on hardware like USB devices, providing better security.
Q. Which is more secure, hot wallets or cold wallets?
- Generally, assets are stored in a combination of both hot and cold wallets for better security.
Q. Is storing cryptocurrency in cold wallets safe?
- Most investors store their coins in exchange wallets.
Q. In the event of a cryptocurrency exchange hack, is compensation for losses possible?
- If the exchange goes bankrupt, "it may be impossible to recover the coins."
Q. What are the potential solutions for compensation in the event of a cryptocurrency exchange hack?
- In the case of a brokerage firm’s bankruptcy, stock investments are protected.
- Brokerage firms act as intermediaries, with stocks managed by the Korea Securities Depository.
- In contrast, if a cryptocurrency exchange goes bankrupt, "the coins are included in the exchange's assets."
Q. Are coins included as part of the exchange's assets? Can losses be compensated?
- Creditors can initiate enforcement actions against the exchange.
- However, a lack of assets at the exchange can significantly increase the chance of losses.
- Legal separation, such as placing investor assets in trust, is necessary to protect investors.
Q. What precautions should individuals take to prevent personal hacking?
- Personal hacks can occur through mobile phones.
- "Hacking incidents often happen after installing suspicious files."
Q. Can installing suspicious files lead to hacking?
- Problems arise when hackers access usernames, passwords, or biometric information such as fingerprints.
Q. What precautions should cryptocurrency exchanges take to prevent hacking?
- For long-term storage, it's advisable to store cryptocurrencies in personal wallets.
- "Cryptocurrency should be stored by the individual."
- "If convenience is a priority, distributed storage is recommended."
