Brazilian Crypto Investment Platform Stops Withdrawals

A cryptocurrency investment platform called Bluebenx suspended its withdrawal services in the previous week.

The Brazilian company was forced to do so after an alleged hack that saw it suffer losses of about $31 million. The announcement dictated that withdrawals would be suspended for at least six months.

Back in January, the Brazilian Securities and Value Commission (CVM) investigated the company.

Withdrawals halted

Last Thursday, Bluebenx made a surprise announcement of pausing its withdrawals, which affected the 2,500 customers of the crypto investment platform in Brazil.

According to the company, it had become a victim of a hack, which had resulted in losses of $31 million. These details were shared by Bluebenx’s attorney, Assuramaya Kuthumi.

Last Friday, the company had written an email to clients in which it explained the reason behind pausing withdrawals.

The company said that its liquidity pools had suffered an aggressive hack in the previous week on the crypto network.

Bluebenx asserted that they had made several attempts to resolve the matter and had now initiated their security protocol, which involved immediately suspending the platform’s Finance products.

This includes not just withdrawals, but also deposits, redemptions, and transfers. But, it should be noted that the company did not provide any details about the attack itself.

However, the communication elaborated that these measures would remain applicable for at least 180 days.

A former employee also reported that on the same Thursday, the company had also let go off all of its staff. The statement said that more than 30 employees had been fired.

Suspicious situation

The hacking report and the fact that it happened at the same time as the mass layoffs have given rise to suspicions about the company and the actual situation that may have prompted the suspension of withdrawals.

Earlier this year, there had already been an investigation into the company by the Securities and Value Commission in Brazil because their investment portfolio had included an offering of unregistered securities.

The company had been enticing customers to make investments by offering them high-yield investment products.

These products required funds to be locked in for about a year and were offering returns as high as 66%.

According to the statements of the customers, some of these instruments did not clarify the investment strategy that would be used.

An anonymous customer had expressed their concerns about the future of the funds that were held on the investment platform.

The customer said that there was a possibility that it was a scam because it seems as if they made the entire hacking incident up.

Other companies

This concern is not unfounded because there have been some other Brazilian companies that have also alleged hacking incidents to avoid paying their clients.

Trust Investing is one such company that first blocked withdrawals of clients for a period of nine months, claiming a hack.

There is currently a bill under discussion in the Brazilian Congress that would impose harsher penalties for criminal activities associated with cryptocurrencies in order to discourage companies and individuals.

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