Police officers in Japan have arrested two suspected cryptocurrency thieves after getting a tip that they had hit a local crypto exchange.
In a report published earlier this week, the Japan Times explained that the suspects- 28-year-old Takuma Sasaki and 25-year-old Yuto Onitsuka- stole up to 78 million yen (about $710,000) in cryptocurrencies from CoinExchange, a small operator in the Japanese crypto industry. Onitsuka is reportedly a former employee of the exchange, and he allegedly used his access to the exchange’s wallets to carry out the operation.
A Devastating Hack
He never met Sasaki, although they frequently communicated via online bulletin boards. While Onitsuka had the login credentials to the exchange wallets, Sasaki used them to order Bitcoin withdrawals from one of the hot wallets owned by the exchange.
The theft reportedly happened in October 2018- a year before CoinExchange shut down due to bankruptcy. An investigation eventually traced the Bitcoins stolen to several local and foreign exchanges, which made it easy for investigators to identify the culprits.
In a statement, Onitsuka reportedly alluded to the theft leading to CoinExchange’s bankruptcy. As he explained, the exchange was already struggling due to the effects of 2018’s bear market, which saw the entire cryptocurrency market lose about 80 [percent of its value. By stealing millions from the exchange, bankruptcy was inevitable.
He also added that he conducted the operation as a form of protest against the exchange’s management. As Japan Times reported, sources had confirmed that he had issues with the management, and wanted to bankrupt the company as a means of getting back at them.
The Japanese crypto space isn’t new to reports of crypto hacks. Last July, Hong Kong-based exchange Bitpoint announced in a notice that an “unauthorized outflow of virtual currency” has led to the loss of about 3.5 billion yen ($32 million at the time) in crypto. The alarm was first raised by customers of the firm, when they noticed that it had stopped processing withdrawals on July 12. The next day, all services had been halted, and Remixpoint- the exchange’s parent company- finally confirmed the worst.
Japan Can’t Escape Hack Reports
The attacks were reportedly targeted at the firm’s hot wallets, which held Bitcoin, Ether, XRP, Bitcoin Cash, and Litecoin. As the press release explained, the firm lost 2.5 billion yen ($23 million) in customer funds, while the remaining while 1 billion ($9.2 million) was its own money. It eventually resumed services later in the year, after promising to reimburse all affected users.
Coincheck, another exchange, was hit in an attack back in 2018, where it lost a record $534 million in NEM tokens. Regardless, Japan has proven to be the biggest hotspot for cryptocurrencies in Japan- thanks to a ban on the assets from China. The government has done its bit to provide a stable regulatory environment, including allowing exchanges to self-regulate and build frameworks for their own operation.
Still, no matter how structured an operating environment is, the specter of cryptocurrency crimes still follows every country.