South Korea's Bithumb loses $32 million in digital money heist, bitcoin falls

SEOUL (Reuters) - South Korean cryptocurrency exchange Bithumb said 35 billion won ($ 31.5 million) worth of virtual coins were stolen by hackers, the second local exchange targeted in just over a week as cyber thieves exposed the high risks of trading the digital asset.

FILE PHOTO: The logo of Bithumb is seen at its cryptocurrencies exchange in Seoul, South Korea, January 11, 2018. REUTERS/Kim Hong-Ji/File Photo

Bithumb said in a notice on its website on Wednesday that it had stopped all trading after ascertaining “some cryptocurrencies worth about 35 billion won were seized between late yesterday and early morning today.”

The exchange, the sixth busiest in the world according to Coinmarketcap.com, said it had stored “all clients’ assets in safe cold wallets,” which operate on platforms not directly connected to the internet.

It added that the company would fully compensate customers.

The Bithumb theft highlights the security risks and the weak regulation of global cryptocurrency markets. Global policymakers have warned investors to be cautious in trading the digital currency given the lack of broad regulatory oversight.

In Ho, a professor at Korea University’s Blockchain Research Institute, said the stolen coins were most likely to be from the more insecure ‘hot wallets.’

“Since coins in the cold wallets are not at all wired to the internet, it would have been impossible for hackers to steal those in cold wallets unless they physically broke in,” said In, a blockchain expert at the research center.

Bithumb did not immediately respond to Reuters’ request for comments, and its statement did not say whether the stolen coins were stored in its ‘hot wallets’.

Mun Chong-hyun, chief analyst at ESTsecurity, said digital coins would continue to be juicy targets for hackers around the world.

“No security measures or regulations can 100 percent guarantee safety of virtual coins. It is held anonymously and in lightly-secured systems, which makes them an irresistible target,” Mun said.

On the Luxembourg-based Bitstamp, bitcoin BTC=BTSP was down 1.8 percent at $ 6,612.92 by 0351 GMT, extending losses as a series of intrusions on cryptocurrency exchanges in recent weeks sparked concerns over security.

It has fallen roughly 70 percent from its all-time peak hit around mid-December 2017.

On June 11, another South Korean cryptocurrency exchange Coinrail said it was hacked. The cyber attacks come after a high-profile theft of over half a billion dollars worth of digital currency at Japan’s exchange Coincheck earlier this year.

In January, South Korea banned the use of anonymous bank accounts for virtual coin trading to stop cryptocurrencies being used in money laundering and other crimes. But the government said it does not intend to go as far as shutting down domestic exchanges.

Bithumb trades more than 37 different virtual coins, according to Coinmarketcap.com

Editing by Shri Navaratnam and Jacqueline Wong

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UNTUCKit, Cuyana, ThredUp Are Driving Retail's Digital Transformation

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Last week I attended WWD’s Retail 20/20 event in New York City. Karla Gallardo, co-founder and CEO of Cuyana said something that really resonated with me, “Retail isn’t dying; our imagination is.” This struck a chord with me because it perfectly tees up the challenge many retailers and brands are facing today. While the imagination of these organizations may be dying, the imagination of the consumer is not. Retailers and brands need to find a way to catch-up, and emerging technologies are a big piece of the equation.

However, when you think of AI, predictive analytics and Big Data, most of the time you’re not thinking about small retailers and brands. But as many of the big retailers struggle to digitally transform their businesses, small and midsize (SMB) retailers are finding their moxie, particularly because they live in a world where avoiding even one misstep can have significant upside for their business.

According to a recently study by Oxford Economics, SMB retailers and brands are investing heavily in mobile and Big Data and adopting emerging technologies—such as machine learning, AI, augmented reality, blockchain and more. Sixty-two percent of SMB retailers surveyed said digital transformation is important or critically important to the company’s survival, particularly as they work to meet consumer demands for personalized experiences, predict consumer preferences and streamline the supply chain.  

AI in particular is growing in retail and is projected to reach $ 27.2 billion by 2025 — a 38-fold increase from 2016 according to a recent report by market research firm The Insight Partners.

While all retailers can benefit from new data-driven technologies, SMB retailers and brands have a distinct size advantage that makes them more agile and able to adapt faster. Since their executives are closer to the product, they are more directly connected to the value of technology investments. Further, SMBs encounter less bureaucracy at the management level which means that change can happen quickly and more easily. 

UNTUCKit is one example, as the company recently announced its plans to collect data on merchandise that is being tried on in-store to optimize its merchandising mix based on what people try on versus what they buy. This will enable the company to adjust inventory levels in real time based on shopper behavior, reducing inventory cost and allowing the retailer to redirect its investments toward more popular SKUs and new offerings.

Similarly, Everlane is taking actions to capture customer data and gain insight into browsing behavior and buying patterns. Even ThredUp, which has a much different model of selling one-of-a-kind second-hand clothing, is implementing data-driven solutions that point buyers to similar items to those that may not be available.  

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EU to propose 3 percent digital tax on turnover of large firms: draft

BRUSSELS (Reuters) - Large companies with significant digital revenues in the European Union could face a 3 percent tax on their turnover under a draft proposal from the European Commission seen by Reuters.

The proposal, expected to be adopted next week and still subject to changes, has been modified from an earlier draft which put the planned corporate rate between 1 and 5 percent.

The tax, if backed by EU states and lawmakers, would only apply to large firms with annual worldwide revenues above 750 million euros ($ 924 million) and annual “taxable” revenues above 50 million euros in the EU.

The tax is presented in the draft as a temporary measure that would only be implemented if no deal is found on a more comprehensive solution which would tax the digital profits of companies in the countries where they are made, rather than where the firms are headquartered as is the case now.

($ 1 = 0.8117 euros)

Reporting by Francesco Guarascio; editing by Foo Yun Chee

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Disney creates streaming video unit for digital future

[unable to retrieve full-text content]LOS ANGELES (Reuters) - Walt Disney Co said on Wednesday it had created a new unit for its streaming video and international businesses as the company retools its traditional media operation for a world rapidly embracing online video.
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Estonia's tech guru outlines ideas for digital 'estcoin'

FRANKFURT (Reuters) - Estonia could become the first country in Europe to launch its own digital means of exchange -- the “estcoin” -- under plans outlined by the manager of its pioneering e-residency scheme, in place since 2014.

Kaspar Korjus said in a blog post that the estcoin would be aimed at the Baltic country’s 27,000 e-residents -- foreigners who open a company there via the web -- but would not be a parallel currency to rival the euro.

This year’s meteoric surge in the value of Bitcoin has focused fresh attention on digital or cryptocurrencies, which to date have all been launched by private companies but are now being considered by some governments and central banks.

Korjus said estcoins could serve one of three purposes: rewarding services to the e-resident community, verifying one’s identity online, or as a means of payment pegged to the euro.

“All three of these models of estcoin are viable and can be introduced (even without alarming the European Central Bank),” Korjus wrote in the blog post.

Estonia’s central bank governor Ardo Hansson later said the estcoin was not a government initiative and that the central bank had not been consulted.

First floated in the summer, the idea of an estcoin was rebuffed by ECB President Mario Draghi, who said in September the only currency of the euro zone was the euro. An ECB spokesman would not comment further on Tuesday.

Korjus stressed the estcoin would simply be a “token” and not compete with the single currency.

But the third of Korjus’s possible designs, which he labels “euro estcoin”, envisaged that it would work as a parallel means of payment that bypasses the banking sector.

“We would never provide an alternative currency to the euro, but it’s possible that we could combine some of the decentralized advantages of crypto with the stability and trust of fiat currency and then limit its use within the e-resident community,” he said.

And the first version, described as a “community estcoin”, would it see openly traded on traditional and cryptocurrency exchanges at a later stage.

That could put Estonia on a collision course with the ECB if estcoin adoption was wide enough to have an impact on the euro zone economy and so interfere with Frankfurt’s monetary policy.

The numbers are small so far, however. A Deloitte report cited by Korjus estimates that e-residents brought 14.4 million euros to Estonia in the scheme’s first three years and foresaw a rise to 1.8 billion euros by 2025.

Venezuelan President Nicolas Maduro announced earlier this month the launch of the “petro”, a digital currency backed by oil reserves, to shore up his country’s collapsed economy and circumvent U.S.-led financial sanctions.

In Europe, Sweden’s central bank has said it may introduce an e-version of the crown currency as the use of cash declines while Bank of England is also pondering whether to introduce a digital currency for use by businesses and households. But Denmark’s central bank said “no” to its own e-crown last week.

The ECB has been lukewarm on the subject but Executive Board member Yves Mersch said recently it would experiment with “cash on different digital technologies”.

Additional reporting by David Mardiste in Tallinn; Editing by Catherine Evans

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