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Digital currencies

Hong Kong-based cryptocurrency exchange offers US$250,000 bounty for hacker tip-offs

Binance, one of the world’s biggest cryptocurrency exchanges, is encouraging other platforms to also put up a bounty to deter cyber thieves from targeting the industry

PUBLISHED : Monday, 12 March, 2018, 2:12pm
UPDATED : Monday, 12 March, 2018, 2:31pm

One of the world’s biggest cryptocurrency exchanges is going on the offensive to deter hacking attempts that have plagued the industry.

Hong Kong-based Binance, founded by Zhao Changpeng, is offering the equivalent of a US$250,000 bounty – paid in cryptocurrency – for information that leads to the arrest of hackers who targeted the venue last week, it said in a statement on Sunday.

The exchange has set aside US$10 million for future bounties and is encouraging other platforms to do the same, it said.

As prices of digital assets have soared, the platforms that trade them have become increasingly juicy targets for cyber thieves.

‘We’re watching you,’ regulator warns Hong Kong cryptocurrency exchanges

Hackers stole tokens worth about US$700 million from venues in Japan and Italy since the start of this year.

The robberies have added pressure on both exchanges and regulators to do more to protect investors.

Founded in July last year, Binance disclosed last week that it had been the target of a “large-scale phishing and stealing attempt”.

While the exchange said “all funds are safe”, Binance noted that it was unable to reverse some trades from accounts targeted by the hackers.

Its bounty offer followed last month’s warning made by the Securities and Futures Commission (SFC) to Hong Kong’s cryptocurrency exchanges after investors complained of practices ranging from market manipulation to misappropriation of assets.

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The SFC said it has sent letters to all seven digital currency platforms as well as firms attempting to raise funds through initial coin offerings (ICOs), warning that they are ready to pass cases of potential fraud to the police for investigation.

“Some complainants claimed that cryptocurrency exchanges had misappropriated their assets or manipulated the market, or that technical breakdowns of the exchanges’ platforms had caused them significant losses. Several complaints against ICO issuers alleged unlicensed or fraudulent activities,” said the SFC in a statement.

Ashley Alder, the SFC’s chief executive, said the regulator “will continue to police the market and enforce when necessary”.

How we regulate cryptocurrencies and ICOs is key to their success

Investors had also complained to the SFC that they were unable to withdraw their funds – either in the form of fiat currencies or cryptocurrencies – from their accounts held with digital exchanges, the SFC statement said.

The tightening of scrutiny in Hong Kong came days after Chinese authorities banned foreign cryptocurrency exchanges in a move that finally brought down the curtain on all forms of activity involving virtual tokens.

Unlike the mainland, Hong Kong allows unregulated trading of digital tokens as long as the products changing hands are not in a format that would fall under the SFC’s jurisdiction.

The SFC said that in terms of daily trading volume, a number of cryptocurrency exchanges in Hong Kong – or which have connections with Hong Kong – rank in the top 20 globally.