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Institutional crypto broker FPG halts withdrawals after $20M cyberattack

June 15, 2023 Coin Telegraph

Institutional crypto broker FPG halts withdrawals after M cyberattack

Coin Telegraph

Floating Point Group informed customers that withdrawals had been halted after experiencing a security breach on Sunday evening.

Cryptocurrency brokerage firm Floating Point Group (FPG) has confirmed it has halted trading, withdrawals and deposits on its platform after falling victim to a cyberattack on June 11. FPG estimates the attack resulted in a total loss of between $15 million and $20 million.

According to a June 15 tweet from FPG’s official twitter account, upon discovering the security breach FPG locked all third party accounts and migrated wallets. It later halted trading, deposits and withdrawals out of “an abundance of caution.”

1/5 On Sunday, we experienced a cyber security incident. Upon discovery, we locked all third party accounts and migrated and secured all wallets until we better understand the scope and circumstances of this incident.
— Floating Point Group (@fpgcrypto) June 14, 2023

Additionally, the firm noted that its account segregation “limited the overall impact” of the attack.

FPG is an international brokerage firm that provides institutional clients with access to crypto markets. According to its website, FPG and its clients manage $50 billion in assets.

The latest development isn’t likely to bolster institutional appetite for the crypto sector, which has already been hit by dwindling market conditions and increased hostility from regulators.

In December 2022, FPG voluntarily consulted cybersecurity firm Prescient Auditors and received its SOC 2 Type 1 certification. This certification is an official audit that verifies the overall safety of a firm’s internal data controls.

“We are working with the FBI, the Department of Homeland Security, our regulators, and Chainalysis to understand how this occurred and to recover assets,” wrote FPG in a subsequent comment.

FPG also noted that due to the ongoing nature of the investigation with respective law enforcement agencies, it couldn’t publicly share any additional details.

Cointelegraph contacted FPG for further information concerning the attack but has not yet received a response.

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SEC to up scrutiny of firms offering or giving advice about crypto

February 8, 2023 Coin Telegraph

broker-dealer

After a recent warning from the SEC, registered crypto brokers and advisers may need to be on edge when giving advice this year.

Crypto brokers and investment advisers offering or giving advice about cryptocurrencies will be put under the scope of the United States securities watchdog this year.

A Feb. 7 statement from the Securities and Exchange Commission’s (SEC) Division of Examinations outlined its priorities for 2023, suggesting brokers and advisers dealing in crypto will need to be extra careful when offering, selling or making recommendations regarding digital assets.

It stated that SEC-registered brokers and advisers will be closely watched to see if they followed their “respective standards of care” when making recommendations, referrals and providing investment advice.

Today we announced the Division of Examinations 2023 priorities. The Division publishes its examination priorities annually to provide insights into its risk-based approach.

For more:
— U.S. Securities and Exchange Commission (@SECGov) February 7, 2023

The SEC will also examine whether these entities “routinely” review and update their procedures to ensure they meet “compliance, disclosure and risk management practices.”

This announcement was similar to the SEC’s priorities released in 2022, however, it seems this year the regulator is putting more emphasis on standards of care and practices by brokers rather than their consideration of unique risks presented by “emerging financial technologies” highlighted in 2022.

The most recent statement comes nearly two weeks after a report claimed the SEC has been investigating registered investment advisers that may be offering digital asset custody to its clients without proper qualifications.

The SEC’s investigation has reportedly been going on for several months but is now top of the priority list after the collapse of the crypto exchange FTX, according to a report from Reuters.

By law, investment advisory firms must be qualified to offer custody services to clients and comply with custodial safeguards set out in the Investment Advisers Act of 1940.

Crypto Broker