Hackers steal $32 million from Japanese crypto exchange

Facebook's new cryptocurrency receives backlash from legislators

Last week, Japanese cryptocurrency exchange Bitpoint suspended trading after losing ¥3.5 billion ($32 million) in a devastating hack. The organization confirmed that the funds were stolen from its hot wallet account. The company further revealed that hackers made off with a mixed batch of cryptocurrencies, including Bitcoin, Bitcoin Cash, and Ripple.

Bitpoint also announced that ¥2.5 billion ($21.3 million) of stolen digital currency belonged to its clients. In the aftermath of the hack, Remixpoint, the exchange’s parent company, saw its stock price fall by 19 percent.

On Sunday, the organization announced that it had recovered ¥250 million ($2.3 million) on an overseas exchange.

Unsettling Pattern

Bitpoint is only the most recent Japanese cryptocurrency exchange to suffer a major hack. In January 2018, hackers stole 500 NEM ($400 million) from the Coincheck exchange. A month after the digital theft occurred, the organization announced that it would repay the lost funds of the 260,000 affected users. Subsequently, Monex Group acquired Coincheck for ¥3.6 billion ($34 million) in April 2018.

Similarly, the Tokyo-based Mt. Gox exchange lost $400 million worth of Bitcoin to hackers in February 2014. Despite managing 70 percent of the world’s Bitcoin transactions at the time, the firm proved unable to recover from the hack. Three weeks after the theft, the platform filed for bankruptcy and began liquidation proceedings in April 2014.

The Coincheck incident prompted a crackdown by Japan’s cryptocurrency regulator. The Financial Services Agency demanded that two exchanges cease trading, and ordered another to improve its security. According to Bloomberg, the organization instructed Bitpoint to strengthen its internal controls after the $400 million theft.

Unstable Coin

While the cryptocurrency sector has grown much bigger since the fall of Mt. Gox, it hasn’t necessarily become more stable.

In 2018, hackers stole a total of $1.7 billion in digital currency, a 3.6 percent increase from 2017. This year, cryptocurrency thefts have gotten even worse. In April, cybersecurity firm CipherTrace noted fraudsters stole $1.2 billion from traders and exchanges in the first three months of the year. Furthermore, in May, rising crypto platform Binance lost $42 million in a single hack.

However, despite the recent increase in digital coin robberies, cryptocurrencies have become increasingly popular. Telecommunications giant AT&T and semiconductor corporation Avnet both began accepting digital coin payments this year. Furthermore, Bitcoin experienced a 40 percent rise in value last month, topping out at $14,000 per unit. But its value fell below $10,000 after President Trump criticized it and other cryptocurrencies on July 11.

Additionally, Facebook sent shockwaves through the entire sector last month when it announced plans to launch a new digital coin called Libra in 2020. Because of the platform’s reach and reputation for mismanaging user data, legislators across the world have criticized the move. Moreover, some lawmakers have proposed implementing new cryptocurrency regulations in the wake of the Libra announcement.

At this point, the future of the digital coin segment seems headed in one of two directions. On the one hand, the industry will implement a series of trader protection/anticrime measures that will satisfy consumers and lawmakers. Alternatively, hackers will conduct a massive multi-cryptocurrency raid that will drag down the entire sector and prompt a global regulatory crackdown.