Japanese Exchange BitPoint To Return $32 Million Worth Of Hacked Cryptocurrencies
Crypto or Fiat?
Japanese Exchange Bitpoint’s hot wallet was hacked on July 12 and the stolen funds amounted to $32 Million in Bitcoin (BTC), Litecoin (LTC), Ether (ETH) and XRP. Nearly 55000 users were affected by the hack as reported by their local English daily.
The exchange’s President apologized for the hack at a Press Conference and vowed to return the hacked assets in full in cryptocurrencies after the exchange resumes services that were suspended following the hack. The hack has been under investigation since then. Bitpoint also happens to be one of the exchanges that received a business improvement order from the FSA last year. The FSA’s major concern was its compliance with AML and KYC requirements.
Bitpoint also discovered that $3–5 Million worth of cryptocurrency was stolen on the overseas exchanges that use its trading system. The exchange’s parent firm — Remixpoint Inc shed 19% post theft. The stock went untraded in Tokyo, following the attack and there was a glut of sell orders. The company announced that victims will be paid back in 1:1 ratio instead of fiat payouts.
Bitpoint has set itself aside from exchanges like Coincheck which refunded over $440 Million in fiat currencies to customers. In a bold move, Bitpoint will reimburse users with the exact crypto holdings they had on the day of the hack which means that regardless of any price fluctuations since then, affected users will receive exactly what they lost to the hack. At the moment, there has been no great variation in crypto valuations, but the longer the payout process takes, the greater the possibility that this could change.
What’s The Industry Practice?
Whether a hacked exchange should reimburse its users in fiat or crypto has been a long-running discussion in Japanese crypto circles because of the regularity of hacks.
The 2014 Mt. Gox hack threw up a similar case, with creditors fighting to be reimbursed with the exact amount of bitcoin they had in their wallets at the time of the hacking. Bitpoint has set a good example by reimbursing in crypto.
Conclusion
It may appear that Bitpoint is setting a good example, but conversely, it has refused to comment on plans to protect customers from price variations and stayed away from a strict timeline for payouts or resuming operations. We can only wait and watch what comes next for Bitpoint’s users.
