Asia Pacific, Breach, Channel markets, Content

Cryptocurrency Hacks: Coincheck Vows Repayments, Binance Offers Bounties

Two months ago, hackers pilfered $530 million worth of cryptocurrency from the Toyko-based Coincheck exchange in one of the biggest digital heists yet recorded. Japanese regulators responded quickly by vowing to inspect all cryptocurrency exchanges and demand fixes.

Late last week, Japan’s financial regulator Financial Services Agency (FSA) ordered exchanges Bitstation and FSHO to shut down for at least a month, amid the former’s fraud and the latter’s loose safety protections. It also reprimanded five others, including Coincheck, for lax cyber security. Coincheck followed by pledging on Monday to begin repaying investors victimized by the robbery about $430 million and lift self imposed curbs on trading and withdrawals of cryptocurrencies following the cyber burglary, a Reuters report said.

The FSA, which criticized Coincheck for falling short on adequate systems to deal with money laundering and financing terrorism, has until March 22 to submit a report on measures it plans to take to close its cyber vulnerabilities.

Binance Announces Hacker Bounty

Changpeng Zhao
Binance Changpeng Zhao

Meanwhile, Binance, one of the world’s largest exchanges, said it will pay a $250,000 bounty in cryptocurrency for information leading to the arrest of the hackers who attempted to crack the platform last week. The exchange, founded by Zhao Changpeng, also said it has set aside $10 million for rewards tied to future attacks, while urging other platforms to follow suit, Binance said in a blog post.

"To ensure a safe crypto community, we can't simply play defense. We need to actively prevent any instances of hacking before they occur, as well as follow through after-the-fact," the exchange said.

With the price of cryptocurrency climbing to stratospheric levels, the frequency and severity of hacks has spiked. Not only Japan but also possibly South Korea are stepping up regulatory restrictions, Bloomberg reported. Changpeng said the regulatory changes won’t affect Binance “for now it does impact some of the Japanese and Korean exchanges.”

Two of largest attacks occurred in 2016 and 2014, when $72 million in digital money was stolen from the Hong Kong-based Bitfinex exchange and two years earlier $500 million in cryptocurrency was lifted from the Tokyo-based Mt. Gox exchange. At the time Mt. Gox handled 80 percent of the world’s bitcoin trades.

D. Howard Kass

D. Howard Kass is a contributing editor to MSSP Alert. He brings a career in journalism and market research to the role. He has served as CRN News Editor, Dataquest Channel Analyst, and West Coast Senior Contributing Editor at Channelnomics. As the CEO of The Viewpoint Group, he led groundbreaking market research.