On Sunday, June 10, renowned South Korean-based cryptocurrency exchange, CoinRail, announced that they had been victims of a hacking attempt. According to the cryptocurrency exchange’s official website “70% of the coin rail total coin / token reserves are safely stored” and, “Two-thirds of the coins confirmed to have been leaked are covered by freezing / recalling through consultation with each coach and related exchanges. The remaining one-third of coins are being investigated with investigators, relevant exchanges, and coin developers.”

Following the cyber-attack and its subsequent announcement, the cryptocurrency market suffered a loss of a whopping $42 billion of its market value. The tweet that announced the hack also triggered a $500 drop in the crypto space in a little over an hour – bitcoin, for one, suffered a 10 percent drop to a two-month low. Many other digital currencies including Ethereum were dragged down as well.

The hack has further triggered a lot of debate regarding the safety of crypto as a whole. Global policymakers, for instance, have warned investors to be cautious in trading cryptocurrencies citing the lack of regulatory oversight.

“CoinRail is not a member of the group that promotes self-regulation to enhance security. It is a minor player in the market and I can see how such small exchanges with lower standards on security level can be exposed to more risks,” Kim Jin-Hwa, a representative at Korea Blockchain Industry Association pointed out recently.

Unexpected Impact?

Ideally, since the hack was on a relatively small crypto exchange, there is no reason for cryptocurrency holders, investors and even speculators to panic over such an occurrence. Unfortunately, this is not the case. Added to the fact that CoinRail is just one of the growing list of crypto-related companies that have been hacked in the past few years, the fact that many people are switching to crypto represents a much bigger concern.

The hack might not be the absolute cause of the plummeting price of digital currencies but it remains to be a key concern that should be addressed soon if the crypto future that we are hoping for will come to be.

Already, 14 major cryptocurrencies in South Korea have adopted necessary measures that are aimed at protecting crypto users – these include restrictions that allow the users to have no more than a single account. As for CoinRail, cryptocurrency trading has been suspended for now as the exchange collaborates with the local authorities as they investigate the hacking. Hopefully, once the CoinRail issuer is resolved, we will see a reversal in the downward trend in the prices of crypto – that is, if it indeed had something to do with the price drops.

As the battle between the cryptocurrency regulation and the ultimate quest for liberation rages on, forty regulators in the United States and Canada have teamed up in an effort to regulated cryptocurrency investment schemes. The collaboration between two countries’ regulators has resulted in the largest crackdown in cryptocurrency scams of this scale in history. So far, there are 70 ongoing investigations with 35 more that have either been completed or are still pending.

CNBC reports that the collaborative effort, that is, the North American Securities Administrators Association (NASAA), has officials from 40 or more different state regulators working together to provide the much-needed coordinated responses to any cryptocurrency-based investment schemes such as Initial Coin Offerings (ICO’s).

The North American Securities Administrators Association (NASAA), as it turns out, is the oldest international organization whose primary goal is investor protection. It also boasts of a vast number of members that include securities administrators from states, provinces, as well as the territories in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada, and Mexico. The organization’s efforts have turned out to be very helpful in ensuring that the crypto industry flourishes safely – its approach involves policing investment opportunities in the United States and Canada such as in ICOs to ensure that they are legitimate and are being carried safely and within the legal boundaries.

“The crackdown comes amid growing attention in the U.S. to cryptocurrency scams, including by the Securities and Exchange Commission and the Commodity Futures Trading Commission. The SEC has brought several fraud cases against operators of initial coin offerings and last week launched a website to help investors recognize scams. William Francis Galvin, the state’s secretary of the commonwealth, said NASAA’s task force found roughly 30,000 crypto-related domain name registrations, many of which appeared in late 2017 as the price of bitcoin neared $20,000,” an excerpt from the CNBC report reads.

Praise from High Places

The NASAA crackdown operation that has since been dubbed “Operation Crypto Sweep” has been lauded by a number of industry bigwigs including Jay Clayton, the chairman of the United States Securities and Exchange Commission. In a statement that was released on Monday, May 22, Clayton said that the state and provincial regulators play a vital role in the protection of Main Street investors.

“The enforcement actions being announced by NASAA should be a strong warning to would-be fraudsters in this space that many sets of eyes are watching, and that regulators are coordinating on an international level to take strong actions to deter and stop fraud,” Clayton added.

In addition to this, Clayton pointed out the fact that NASAA’s efforts would drive out bad actors and scammers early on thus ensuring that governments adopt stances that are not going to choke off the crypto industry.