Brazilian Crypto Investment Platform Bluebenx Stops Withdrawals Under Hack Allegations

Bluebenx, a Brazil-based cryptocurrency investment platform, suspended withdrawals last week due to an alleged hack that made the company lose more than $31 million. The company announced that the withdrawals would be stopped for at least six months. The company has been investigated by the Brazilian Securities and Values Commission (CVM) in January.

Bluebenx Stops Withdrawals, Allegedly Loses $31+ Million in Hack

A Brazilian cryptocurrency investment platform, Bluebenx, paused withdrawals in its platform last Thursday, affecting approx 2,500 customers in the process. The company alleges it was the victim of a hack that made them lose more than $31 million, according to Assuramaya Kuthumi, Bluebenx’s attorney.

The company wrote an email to customers last Friday, explaining the reason for the withdrawal. The email reported:

Last week we suffered an extremely aggressive hack in our liquidity pools on the cryptocurrency network, after incessant attempts at resolution, today we started our security protocol with the immediate suspension of operations of BlueBenx Finance products, including withdrawals, redemptions, deposits, and transfers.

However, no details were shared about the nature of the attack, but the communication did explain that these measures would be active for 180 days, at least. The same Thursday, the company fired all its employees, according to reports from a former employee obtained by Portal do Bitcoin, a local source. More than 30 employees were fired, according to statements from the former employee.

Suspicious Circumstances

The report of the hack, and how it coincided with the mass layoffs at the company have created suspicions about the real reasons that caused this withdrawal suspension. The company had been investigated earlier this year by the Brazilian Securities and Values Commission due to an alleged offering of unregistered securities as part of its investment portfolio.

The company offered high-yield investment products to entice customers to invest. These products offered up to 66% for having invested funds locked for a year, Some of these instruments did not disclose the investment strategy behind them, per customers’ statements. An anonymous customer stated having fears about the future of the funds held on the platform. He stated:

I think there’s a high probability that it’s a scam because this whole hacking thing seems like something they made up.

Other Brazilian companies have also alleged hacks to stop paying their customers. This is the case of Trust Investing, which also blocked withdrawals for its customers for nine months due to an alleged hack attack.

The Brazilian Congress is currently discussing a bill that would establish harsher penalties for crypto-related crimes to discourage companies and individuals from offering scam products and running pyramid schemes.