The Japanese bitcoin exchange Bitpoint is the latest platform to fall victim to hackers, losing $32 million in cryptocurrencies according to a report by Remixpoint Inc., its parent company.
Bitpoint joins other Japan-based exchanges, including Zaif and Coincheck to suffer losses due to cyberattacks. The platform could also face regulatory heat given the nature of the attack and the previous warnings regarding its operations.
Hot Wallet Compromised in Bitcoin Exchange Hack
Remixpoint released a statement on its website on July 12, 2019, announcing the hack. According to the post, the Bitcoin exchange lost 3.5 billion yen (about $32 million) to the hackers.
Of this amount, 2.5 billion yen ($23 million) belonged to Bitpoint’s customers while the remainder was the company’s funds. The stolen cryptocurrencies include bitcoin (BTC), bitcoin cash (BCH), and XRP (XRP).
The hackers reportedly gained access to a hot wallet belonging to the exchange and managed to siphon off five cryptocurrencies with the other two being litecoin (LTC) and ether (ETH). According to the statement, the company discovered the attack on July 11, 2019.
Following the attack, Bitpoint says it has halted all trading activities as well as deposits and withdrawals. On the subject of compensation, the company’s statement reads:
“To prevent any harm to customer assets, we will handle this responsibly, for example in terms of compensation from Bitpoint”
In the aftermath of the hack, Remixpoint shares dropped 19 percent as traders likely entered panic mode. Bloomberg reports that the company’s shares remained untraded in the Tokyo stock market due to a massive increase in sell orders.
Bitpoint Likely in FSA Hot Water
Bitpoint, one of the members of the Japanese Cryptocurrency Exchange Association (JCEA), could also be in for some scrutiny from the Financial Services Agency (FSA). The financial regulator had instructed the platform to revamp its internal controls before this hack.
Given the occurrence of this incident, it appears such warnings may not have been adequately heeded. The FSA has continuously requested exchanges to improve their security parameters, de-emphasizing the use of hot wallets which continue to prove vulnerable to external intrusion.
Having $32 million worth of cryptocurrencies in hot wallet storage might seem to be foolhardy given the spate of attacks against online wallets owned exchanges. The company, however, assured traders that its cold wallet remains secure.