As many as 100 crypto exchanges and related businesses may have been affected by a series of attacks on exchange technology provider AlphaPoint and its clients.
Media reports in Norway and Brazil suggest that at least five crypto exchanges have been affected by the series of hacks that began in early May, resulting in a loss of funds, liquidity issues and a suspension of withdrawal and deposit services.
Bitcoins Norway, Foxbit, Coinext, FlowBTC, and Casa do Bitcoin are named among those affected – though this may be the tip of the iceberg as exchanges are often reluctant, or unable for contractual reasons, to draw attention to hacks.
The FBI is reportedly investigating the security breaches, which AlphaPoint has confirmed involve phishing and SIM swap attacks.
Bitcoins Norway first to report the series of hacks
Norwegian exchange Bitcoins Norway blew the whistle on the attacks on July 1, initially reporting the loss of half a million USD worth of crypto from attacks beginning in early May.
It now says that figure represents just “a small proportion of the total” and that all of its hot wallet funds were taken.
It lost access to AlphaPoint’s hot wallets and security systems as a result of the hacks.
The exchange’s response to the attacks – selling off all remaining user funds – has led to a potential class-action lawsuit seeking “tens of millions of dollars”.
Alphapoint skal betale erstatning til Bitcoins Norge https://t.co/dlPHvDSDqa
— LM Newsroom (@LMExtra) July 9, 2019
AlphaPoint confirms hacks – E24
“AlphaPoint was hit by so-called phishing and SIM swap scams,” the company confirmed in an email to Norwegian website E24 on July 9. (Note: quotes and details taken from overseas media have been auto-translated).
“AlphaPoint assured Bitcoins Norway that we will compensate them … we stand by our customers.”
AlphaPoint said user funds were insured and that neither hardware nor technology was compromised.
Who is AlphaPoint?
AlphaPoint is based in New York and provides a White Label trading and technology platform that enables prospective crypto exchange owners to buy an off the shelf solution including matching engines, an order management system, hot and cold wallets, security and account administration – while skinning it with their own ‘front end’ interface.
It boasts of 100 clients worldwide and previously worked on the trading engine for Bitfinex.
At least two platforms in Australia are believed to use AlphaPoint’s services, though this has not been confirmed by the exchanges themselves.
Two local crypto exchanges have also experienced issues with withdrawals over recent weeks, though it’s unknown if this is simply coincidental.
Hacks unfold from May 1
Detailing the Bitcoins Norway saga, website Kryptografen reported that AlphaPoint had told the exchange on May 1 that all ‘hot wallets’ had been robbed, but the funds were covered by insurance.
Bitcoins Norway, however, did not inform users until two months later after the board learnt that AlphaPoint “had been subjected to several serious computer attacks”, according to owner Ole-André Torjussen.
The attacks forced its hand on June 30 and it controversially announced the next day it was selling off the remaining user funds on the platform and would return the value of the cryptocurrency as of early May when the attacks began.
The Bitcoin price was a little under $6000 then and has climbed twice as high since, leading to the potential class action.
Torjussen said any funds it recovers through sales or insurance would “benefit customers. We will not keep any of this”.
Alphapoint, teknologileverandøren til Bitcoins Norge, sier de står ved sine kunder og vil betale ut erstatting. – https://t.co/2VaAgWgIst
— Kryptografen (@kryptografen) July 10, 2019
Brazilian media links four more exchanges to hacks
Brazilian crypto news sites Mandee and CryptoFacil have both linked AlphaPoint to at least four Brazilian exchanges that suffered outages throughout May and June.
CryptoFacil said that it had reported in late May that “all deposits and withdrawals of cryptocurrencies were paralyzed” on Foxbit, Coinext, FlowBTC, and Casa do Bitcoin, which was blamed at the time on a system update from AlphaPoint.
The crypto news site now believes that in light of the series of attacks reported by Bitcoins Norway, this was merely a cover story. AlphaPoint has not confirmed this.
Mandee reported that Foxbit suspended withdrawals and deposits in June, locking user funds.
Foxbit said AlphaPoint was moving wallets and funds to BitGo, one of the world’s largest crypto custodian and security companies.
Micky has contacted AlphaPoint for comment, and more information on the scale and severity of the attacks.
— CriptoFácil (@criptofacil) July 10, 2019