Business & FinanceSpotlight

$32 Million Japanese Crypto Exchange Hack – What We Know So Far

Bitpoint reportedly identified an unauthorized outflow of cryptocurrency from the platform. The team was quick to suspend all its services immediately, maintaining that they are working hard to uncover the cause, identify the outflow and minimize the damage as well.

It was further revealed that among the lost funds, 2.5 billion yen, which is equal to $23 million, belonged to the platform’s customers. Meanwhile, one billion yen, which is $9.2 million, of the stolen funds belonged to the exchange.

A report by Bloomberg suggests that Bitpoint’s parent company Remixpoint’s shares plunged 19 percent to their daily lower limit and they “remained untraded in Tokyo as of 1:44 p.m. on a glut of sell orders”.

As per the reports, only the company’s hot wallets were compromised that contained the aforementioned cryptocurrencies whereas the cold wallets of the Tokyo-based exchange are said to be unaffected by the hack. No further details about the hack have been shared by Bitpoint as of yet.

Cryptocurrency exchanges in Japan were just on the heels of recovering from the rough patch that they had been going through because of the tight inspections and obligations of the Financial Services Agency (FSA), Japan’s top financial watchdog. The Japanese law requires companies that are interested in operating crypto exchanges to register with the FSA.

READ ALSO: $5 Million Crypto Loss: Even the Most Advanced Crypto Exchange Suffered Hack

According to reports, as of now 19 registered platforms are operating in Japan, among which 16 were approved back in 2017 while the remaining three managed to acquire the approval only this year. The FSA held off on all the approvals in the previous year, making 2018 particularly tough on cryptocurrency exchanges in the region.

Interestingly enough, the freshly hacked Bitpoint was one of the exchanges which received registration early on in September 2017. However, prior to the hack the exchange was reportedly served a business improvement order by FSA during the agency’s inspection drive. In addition to Bitpoint, several other crypto exchanges bore the brunt of FSA’s investigations, including one of the country’s largest crypto exchanges by trading volume, Bitflyer.

Bitflyer, after freezing its services for a year, resumed its operations only recently, on July 3. Very much like Bitpoint, the platform received a business improvement order from the FSA, hence it voluntarily suspended its services. Upon resuming its operations, the company wrote:

Voluntarily suspended new account creation in order to reconfirm the identity of our existing customers and strengthen our internal management structure. We would like to announce that new account creation has resumed

In addition to that, Fisco cryptocurrency exchange, which is famous for acquiring the registered crypto exchange Zaif, also received an administrative order, after it got hacked September last year. The reason behind the administrative order, according to the agency, was that the management did not recognize the importance of legal compliance thus leading to a number of legal violations. FSA further explained:

There have been problems with the company’s business management system … [and] also problems in the risk management system for money laundering and terrorist financing, and the external management system such as outsourcing management system.

READ ALSO: Crypto Exchange Hack: Russian Link Found in Email Viruses

Cielo EX Ltd. is another exchange that has received multiple warnings from the FSA. This one, however, seems rightfully so as the exchange is known for providing services to Japanese residents without authorization. The platform offers the trading of several cryptocurrencies including BTC and Asobi Coin (ABX).

On the bright side, just earlier on Monday, the FSA revealed that about 110 exchanges showed interest in the Japanese market and several of them are in “various stages of registration”. And that is why the Bitpoint hack comes at an inconvenient time; it could jeopardize other exchanges as FSA will be on its toes yet again.

Today’s hack of the Japanese crypto exchange marks 2019’s sixth breach following the $40 million hack of top crypto exchange Binance and more recently the $5 million hack of the Singaporean crypto exchange, Bitrue. According to The Block’s research, the total amount ever stolen from cryptocurrency exchanges now stands at nearly $1.39 billion.

READ ALSO: Crypto Fraud: Brothers Put Behind Bars for the 2016 Exchange Hack

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Abeer Anwaar

Abeer holds a Bachelors degree in Media studies and covers blockchain startups for BlockPublisher. An optimist, excels in the art of the written word and swears by the joy of all things sweet. Contact the editor at editor.startups@blockpublisher.com

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