Hackers managed to steal about ¥3.5 billion ($32 million) worth of Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and XRP, from Japanese cryptocurrency exchange BITPoint.
The exchange, which is owned by Remixpoint Inc., said about ¥2.5 billion of the stolen funds belonged to customers, while BITPoint owned the rest.
After realizing the irregular withdrawal, the company was forced to suspend all of its services, including trading, deposit and withdrawal of all cryptocurrency assets. Customers received an email alerting them that BITPoint would cease services as it investigates the matter.
The funds were stolen from a hot wallet. No funds were missing from the company's cold wallets.
This incident causes Remixpoint's shares to plunge 19% several hours after the news, and became untradeable due to the high demand of share owners trying to get rid of their shares.
This isn't the first big crypto exchange breach in Japan.
Previously, in September 2018, Zaif, another licensed exchange under the Japanese Financial Services Agency, was hacked for $60 million worth of cryptocurrencies. Coincheck, another Japanese exchange was also breached, with more than $520 million worth of cryptocurrencies being stolen.
Similarly, in 2014, Japan-based MtGox cryptocurrency exchange was forced to shut down its operations after 850,000 BTC worth $500 million at the time went missing from its wallets. During that time, MtGox was one of the largest exchange as it handled close to 80 percent of all Bitcoin BTC transactions in the world.
Acknowledging the matter, Japan’s Financial Services Agency (FSA) has ordered exchanges to take precautions and bolster their security controls after the incidents.
Because many cryptocurrency owners store their digital coin assets on crypto exchanges, these businesses have become the target of hacks.
To prevent hacking incidents, experts suggest that communication between exchanges is vital.
Since hot wallets are vulnerable to system compromises because they are connected to the internet, it's important for those exchanges to also store cryptocurrencies on cold wallets (not connected to the internet). And by establishing a line of communication between crypto exchanges, these businesses should be able to trace, freeze, and stop suspicious transactions that are on the move.
This is because funds are usually transferred from one exchange to another.
When hackers manage to steal from one exchange, they will usually move the fund to another exchange. This is why a working communication system should help exchanges to suspend virtual vaults swiftly, assisting them in the recovery of funds.
