$32 million stolen from Tokyo cryptocurrency exchange

Security
Japan

$32 million (£25 million) has been stolen from a cryptocurrency exchange in Tokyo in an apparent hack attack.

It’s thought that in total, ¥3.5bn disappeared in various types of cryptocurrency under the management of Remixpoint, the company that was running Japan’s Bitpoint exchange when the attack happened.

The problem was spotted when an error message on the outgoing fund transfer system came up.

As well as Bitcoin, the virtual exchange also takes care of Ethereum and Ripple.

Bitpoint has since suspended all services.

Hot and cold wallets

The cryptocurrency went missing from a ‘hot-wallet’ where the money was being held. This was connected to the internet.

The money kept in ‘cold-wallets’ was not connected to the internet and this money was kept safe.

Should cryptocurrencies be banned?

Some authorities have suggested banning cryptocurrencies because of the lack of understanding of the subject.

The Financial Conduct Authority (FCA) is a regulatory body that feels this way. Earlier this month, Christopher Woolard, the executive director of strategy and competition at the FCA, said: “Most consumers cannot reliably value derivatives based on unregulated crypto-assets. Prices are extremely volatile and as we have seen globally, financial crime in crypto-asset markets can lead to sudden and unexpected losses… It is therefore clear to us that these derivatives and exchange traded notes are unsuitable investments for retail consumers.”

A few countries, like Iran, have already made virtual money completely illegal.

Customer compensation

Of the money that vanished from the exchange, ¥2.5bn was from customer shares. Remixpoint said they will refund this back to the clients.

Remixpoint has claimed to be analysing the issue but since the announcement, shares in the company have dropped by 20%.

 

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