$32 200 000 USD
DESCRIPTION OF EVENTS
"BITPoint is a licensed cryptocurrency exchange based in Tokyo, Japan. There are BITPoint affiliates in Hong Kong, Korea, Taiwan, Malaysia, and Panama which operate virtual currency exchanges." "BITPoint offers digital asset trading services for bitcoin, Bitcoin Cash, Ether, Litecoin, and XRP. The company also offers wallets to its customers to store their digital assets." "A full range of trading tools that satisfy both beginners and advanced investors." "Bitpoint Japan Co., Ltd. 4-3-9 Toranomon, Minato-ku, Tokyo 105-0001" "Oda Genki, Director Representative President; Hito, Director COO; Yohei Onishi, Director; Masaharu Hino, Special Advisor" "It was founded on March 3, 2016, and is headquartered in Roppongi, Tokyo, Japan."
"BITPoint Japan is a compliant digital asset trading platform that offers virtual currency exchange." "Tokyo-based Remixpoint runs the BITPoint exchange as well as travel, used car and energy businesses." "It is also present in Asia such as Japan, Thailand, Philippines, Taiwan, and Hong Kong and in Latin America."
"Bitpoint was one of multiple domestic crypto exchanges to have been served a business improvement order from Japan’s financial regulator, the Financial Service Agency (FSA), during its wide-ranging inspections of industry businesses, per Bloomberg." "Bitpoint was one of several exchanges to receive a business improvement order in June of last year. One of the FSA’s main concerns was the exchanges’ compliance with Anti-Money Laundering and Know Your Customer requirements. The agency also expressed concerns that customer funds were not being kept sufficiently separate from those of the exchanges."
"On July 12, 2019, it halted all services after noticing an irregular withdrawal from its hot wallet on July 11." "Japan-based Bitpoint halted all services on Friday, including withdrawals, deposits, payments and new account openings, when it detected an error in Ripple remittances. It later discovered it had been the victim of a cyber-attack." "Days after admitting to a hack that caused the loss of $32 million in cryptocurrency, Bitpoint Japan, a cryptocurrency exchange operator run by Remixpoint, said on Sunday (July 14) it has discovered an additional $2.3 million was stolen."
"In a post published on Tuesday, the company confirmed that the crypto assets stolen in the July 12 hack included 1,225 bitcoin, 1,985 bitcoin cash, 11,169 ether, and 5,108 litecoin." "Remixpoint said the lost money was in what is called the “hot wallet.” Money in the “cold wallet,” which has tighter security, was safe."
"According to a July 15 report from English-language Japanese business newspaper Mainichi, BITPoint discovered about 2.3 million of the missing funds trading on European platforms that use software originally provided by BITPoint." "The company's latest estimate of losses from the security breach comes to around 3.02 billion yen ($28 million) – roughly $4.6 million less than originally thought, the report says."
"Cryptocurrency exchange operator BITPoint Japan Co. will reimburse about 50,000 customers who lost assets in an apparent hacking with cryptocurrency, not cash, it announced on July 16 at a news conference in Tokyo." "Genki Oda, 38, president of BITPoint Japan, apologized at the news conference and said that the operator has been investigating the cause of how the assets were siphoned off."
"On July 17, representatives of BITPoint told reporters of the Japanese newspaper Asahi Shimbun that all of the roughly 50,000 users who lost their assets in the hacking attack would receive refunds on a 1:1 basis." "Bloomberg reports that shares of Bitpoint’s parent firm Remixpoint Inc. shed 19% following news of the incident, and were untraded in Tokyo as of 1:44 p.m. “on a glut of sell orders.”"
"Bitpoint has responded by suspending all services, including withdrawal, trading, and deposit. The company says it hasn’t detected any irregular activity or missing funds affecting cold wallets (those that aren’t connected to the internet)."
"Of the initial hack of $32 million, two-thirds belonged to customers of the exchange — the rest to the company. This marks the eighth major cyberattack on a cryptocurrency in 2019 and is one of the largest." "Bitpoint has notified local authorities and is actively investigating the incident."
"The company re-opened some trading services on August 6, 2019, after a successful safety assessment of the platform's wallet." "Bitpoint is re-opening cash deposits and withdrawals in fiat currencies on August 6th following a safety assessment of the exchange's cryptocurrency wallet. According to CoinDesk Japan, the hacked wallet is no longer in use and therefore not under threat." "Margin trading services will begin August 9th. The exchange says margin trading utilizes a similar wallet to fiat withdrawals. Spot trading will open on August 13th."
On July 11th, 2019, the BitPoint exchange in Japan lost a mix of 1,225 bitcoin, 1,985 bitcoin cash, 11,169 ether, and 5,108 litecoin. All assets were stored in hot wallets, and the platform's cold wallets stayed safe. In this case, the exchange has stated they will be reimbursing the 50,000 affected customers. Services were resumed on August 6th.
HOW COULD THIS HAVE BEEN PREVENTED?
While the most secure storage by far is a multi-signature wallet with all keys properly held by trained individuals, security of hot wallets can be improved by having additional experts review the security of systems. Our proposed framework sees 2 reviews prior to launch, and regular reviews on an ongoing basis. In the event of a breach, a comprehensive industry insurance fund would be available, which handles fraud and covers additional events beyond self-insurance.
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