Japanese cryptocurrency exchange Bitpoint was hacked last week when hackers stole 3.5 billion yen ($32 million) from the exchange's hot wallet, of which 2.5 billion yen were customer funds.
It has now come to light that around 50,000 of its 110,000-strong customer base were affected by the hack, just days after an operational improvement order, imposed last year, was lifted at the end of June.
¥3.5 billion hacked from Bitpoint cryptocurrency exchange https://t.co/zbdqXgFCIO
— The Japan Times (@japantimes) July 12, 2019
More details have emerged about the Bitpoint hack
The Japanese cryptocurrency exchange has revealed that it lost additional digital currencies worth 250 million yen ($2.3 million) at exchanges outside of Japan, as reported by Japanese daily newspaper The Mainichi. These overseas exchanges reportedly used Bitpoint’s trading system.
Customers’ money lost by Bitpoint reportedly accounted for 13 percent of the total digital assets the cryptocurrency exchange held.
Hackers seem to have found an easy way into Bitpoint’s systems as the cryptocurrency exchange’s hot wallet – containing bitcoin, bitcoin cash, litecoin, ripple, and Ethereum – could have suffered from poor security measures. This is because the Japanese Financial Services Agency (FSA) had pulled up Bitpoint last year on grounds of poor internal controls, telling it to shore up measures to protect its users.
The cryptocurrency exchange has failed on this front, but it is looking to save face by offering to compensate users for their losses.
The cryptocurrency exchange is trying to win back confidence, but will that be enough?
Bitpoint Japan President Genki Oda has refused to step down from his role in the aftermath of the hack. He has already issued an apology and has clarified that the cryptocurrency exchange will return the stolen digital assets to the affected users once it resumes services following last week’s hacking.
But at the same time, Oda says that it is unclear as to when Bitpoint will resume operations. The investigation is still underway and Bitpoint says that there isn’t much clarity about the bad transactions.
This means that customers who have lost their funds will remain in limbo until and unless the cryptocurrency exchange restarts operations. But whether that will happen or not in the near term remains isn’t clear just yet.
Japan has been a happy hunting ground for hackers who have regularly targeted the country’s cryptocurrency exchanges.
As such, the FSA can be expected to take a critical view of Bitpoint’s failure to improve protection customer measures after warning it last year.
Of course, Bitpoint has pledged to return the stolen money, but what if it bad actors steal a much bigger amount in the future that it cannot fully compensate? So don’t be surprised to see Bitpoint customers taking their business away to other cryptocurrency exchanges that have displayed stronger security measures.