BitoEX Taiwan cleared of all three charges, victims puzzled and angry: failure to disclose actual amount of damages, all blame shifted to BitoEX Japan

BITPoint Japan was hacked in July 2019, resulting in an estimated loss of 3.5 billion Japanese Yen. The Taiwan-based exchange, BitoPro, which operates on the same core trading system, also suffered from the attack. Users have experienced frozen accounts, including both cryptocurrency and fiat currency balances. Taiwanese users filed a criminal lawsuit against the responsible individuals of BitoPro in October last year for suspected violation of "breach of trust" laws. After a year, the three defendants have been cleared of charges.

Chronology of Events

It is understood that the prosecutors believe that the three defendants (Chairman: Huang Jizhong, Manager: Guo Yaning, Taiwan Responsible Person: Takahashi Yuu) only provided a platform for virtual currency trading and did not handle entrusted tasks or deal with cryptocurrency assets, therefore, they were not charged with breach of trust. Consequently, the suspension of services by Bitpoint Japan, freezing of assets for Taiwanese users, and the lawsuit filed by Bitpoint Taiwan against Bitpoint Japan did not result in any blame on the three defendants. Thus, Bitpoint Taiwan received a non-prosecution disposition. The events unfolded as follows:

• 2017.12.20: Establishment of Bitpoint Taiwan approved
• 2019.07.11: Bitpoint Japan hacked, 3.5 billion yen lost, Japanese side shuts down cryptocurrency trading system
• 2019.07.12: Bitpoint Taiwan and Bitpoint Hong Kong also halt "cryptocurrency deposits and withdrawals." However, trading remains possible, and new Taiwanese dollars can be deposited and withdrawn
• 2019.07.12: Manager surnamed Guo issues a statement, stating that funds in Taiwan and Japan are managed separately. Users were unable to withdraw their assets immediately.
• 2019.07.22: Bitpoint Taiwan suspends registration, bank binding, and fiat currency deposits and withdrawals
• 2019.07.23: Bitpoint Taiwan temporarily halts cryptocurrency trading services
• 2019.07.29: Bitpoint Taiwan suspends login services
• 2019.09.10: Bitpoint Taiwan announces filing a lawsuit against Bitpoint Japan
• 2019.10.16: Victims file criminal lawsuits, accusing Chairman surnamed Huang, Manager surnamed Guo, and Taiwan branch responsible person Takada of breach of trust, fraud, and embezzlement
• 2020.04.27: BITPoint Japan announces termination of Taiwan system services

• 2020.06.20: Bitpoint Taiwan's defendants receive non-prosecution disposition for breach of trust, fraud, and embezzlement charges, and have the right to apply for reconsideration

In July, victims received non-prosecution notices one after another. According to the explanation in Non-Prosecution Document No. 6771, the prosecuting attorney pointed out that for a reconsideration, Taiwanese users must prove an actual entrusted relationship between Bitpoint Japan and Bitpoint Taiwan, as well as the existence of an independent fund pool for Bitpoint Taiwan.

After the prosecutor's decision of non-prosecution, the plaintiff can apply for reconsideration within 10 days. If the prosecutor at the High Prosecutors' Office deems the reasons for reconsideration sufficient, the case will be sent back to the district prosecutor's office for further investigation. If the High Prosecutors' Office prosecutor finds no reason for reconsideration and rejects the application, the plaintiff can only seek court adjudication without going through the district prosecutor.

Discrepancies in Remaining Funds and Amount of Damage, Solely Due to Bitpoint Japan?

According to the non-prosecution document, the cryptocurrency assets of Bitpoint Taiwan victims are stored in Bitpoint Japan, while users' new Taiwanese dollar funds are held in a dedicated account at the Federal Bank, totaling NT$10,847,170 as of March 16, 2020, deposited with the Taipei District Court. Therefore, the court ruled that there was no intention of embezzlement.

According to interviews with affected users, they stated that Bitpoint had been unwilling to disclose whether there were remaining new Taiwanese dollar funds and the amounts during the negotiation process, and they only found out about the remaining funds after the court trial. Due to the large number of victims, it is difficult to assess the extent of damage to cryptocurrency and new Taiwanese dollar assets. Some victim groups claim that a single large account holder had NT$8 million in deposits, while other smaller account holders suffered around NT$1.5 million.

The user expressed anger, stating that the actual deposits held by affected users must be more than the NT$10 million claimed by Bitpoint Taiwan. Even if the funds are correct, why did Bitpoint Taiwan not voluntarily disclose this information and instead made it public through legal proceedings?

Bitpoint Taiwan attributes the unclear and deficit accounts to deliberate depletion by Bitpoint Japan, and the matter is currently being dealt with by the Japanese court. The user believes that through banking and blockchain analysis tools, it should be relatively easy to clarify the financial transactions between the two companies, making it not difficult to ascertain the funds Bitpoint Taiwan should hold.

As for whether to appeal again, the user believes that the cohesion within the victim community is still insufficient, and he also suspects that Bitpoint Taiwan has infiltrated the group, attempting to divert attention and shift blame to Bitpoint Japan, making it difficult to consolidate opinions. However, he still believes that the questionable nature of Bitpoint Taiwan's new Taiwanese dollar account will be beneficial for victims to appeal again.