Will Cryptopia Exchange’s Hack Damage the Crypto Industry’s Reputuation as a Whole?
Back on January 14, the New Zealand-based cryptocurrency exchange was hacked. According to several reports, the exchange seems to have lost several millions of dollars in Ethereum (ETH) and other virtual currencies.
The cryptocurrency exchange released an announcement informing what happened on Twitter on January 15. According to the exchange, the platform suffered a security breach that resulted in ‘significant losses.’
— Cryptopia Exchange (@Cryptopia_NZ) January 15, 2019
The police and local authorities are currently working on the matter trying to understand what happened and how to solve this situation. It might be possible to capture those involved in the hack and recover part of the funds lost.
As 2018 ended, 2019 seems to be the year in which new regulations could be implemented by different countries around the world. Back in January 2018, the Japanese cryptocurrency exchange Coincheck was hacked losing more than $500 million in digital assets from its users.
After this situation, Japan started to take several measures to protect investors in the market. The Financial Services Agency (FSA) decided to tighten regulations and perform a tough control over exchanges that operated in the country. It has also decided to provide licenses for crypto exchanges to operate.
During the year, another exchange was hacked. Because of this reason and other smaller issues, regulatory agencies are becoming very cautious about how to regulate the space. Indeed, stricter rules are being implemented by companies all around the world.
Due to the different attacks that these platforms experienced in the last years, the industry was not able to create a good reputation around the world. If exchanges are not able to solve these issues, investors and individuals will not trust the space and involvement will decline.
Several companies prefer to focus on profitability rather than on investor protection. However, South Korea and Japan have already implemented some regulations that require exchanges to allocate a specific threshold of revenues to security and internal management system development.
During 2018, Cryptopia has been developing its platform in order to increase trading volume in a very competitive cryptocurrency market. Due to this situation, we could believe that the decision to allocate more funds to platform development than to security could have played an important role in affecting the exchange.
During the last months, exchanges in South Korea or Japan have been more stable and experienced fewer flaws. In Japan, for example, there are around 200 companies waiting for approval to operate in the market. If the cryptocurrency world wants to expand, it will have to pay close attention to security.