Around 46.3 billion yen (£380 million) worth of virtual currency has been stolen from a major Japanese digital exchange.
Shibuya, Tokyo based site operator Coincheck Inc has announced the theft of the lesser known cryptocurrency, known as NEM, following an ‘unauthorised access.’
This has sparked fresh concerns over security measures in terms of cryptocurrency.
This is the scene outside Coincheck HQ right now @coincheckhack pic.twitter.com/0PvIvM9sxc
— Smashing Coin (@SmashingCoin) January 26, 2018
The digital currency vanished on 26 January at 3am, with assets said to belong to customers.
The operator became aware of the situation eight hours after the hacking, at 1:30pm. Following this shocking discovery, Coincheck was forced to suspend all Friday cryptocurrency withdrawals apart from bitcoin.
This is said to be one of the largest ever thefts of cryptocurrency of all time.
If the rumors about the Coincheck hack are true (a billion XRP and $600M worth of NEM being withdrawn), we're looking at the largest hack in the history of cryptocurrencies (at least $1.6B, not counting possible withdrawals of other currencies).
— Hubert ⚡️ (@hubert_btc) January 26, 2018
Coincheck is reportedly looking into the factors such as compensation. In an official statement, the company revealed plans to repay each of the affected 260,000 NEM coin owners at a rate of 88.549 yen (0.5756 GMP).
However, the timing and method are still being figured out.
According to the statement:
The timing of the reimbursement and the application process are currently under consideration,
The source of the refunded money is being carried out using our own capital.
– 500 million $XEM stolen -approx. $500 million USD
– Hacker address identified in minutes, funds flagged & can't be used. No fork.
– Japan FSA certified 11 $crypto exchanges. #Coincheck wasn't 1 of them so it was operating illegitimately.
— Demetrius (@CryptoDemetrius) January 26, 2018
At a press conference reported by NHK World, Coincheck president Koichiro Wada apologised for the problems this crime has caused for customers and others affected.
Wada explained to reporters how NEM coins are kept in a ‘hot wallet’ rather than a more secure ‘cold wallet.’
The reasons behind this were stated as being technical difficulties as well as shortage of staff with the requisite capabilities.
NEM price after CoinCheck hack revealed pic.twitter.com/F3wsKiBcan
— Wong Joon Ian (@joonian) January 26, 2018
The company is said to have knowledge of the digital address where the cryptocurrency was sent and is working to assess the possibility of recovering the lost assets.
It is not yet known as to when trading will return to normal.
If you aren’t a trader, do NOT leave your crypto on an exchange. Ever.
This was THE BIGGEST HACK IN THE HISTORY OF CRYPTO and there *will* be more.
Airbitz rebranded into @EdgeSecure to specialize in SECURITY.
— Tiffany Hayden (@haydentiff) January 26, 2018
According to Reuters, two sources have stated how Japan’s Financial Services Agency (FSA) warned around 30 companies operating cryptocurrency exchanges regarding the possibility of more cyber-attacks,
The companies were encouraged to improve security measures. The sources described how the FSA is also considering enforcing administrative punishment for Coincheck in accordance with financial settlements law.
4/ The Coincheck hack had the potential to do mass destruction to the crypto industry. But NEM was transparent from the beginning+ worked with the community + Coincheck clients to ease FUD. This is how it's supposed to work. Transparency always. The hacker will not win. We will.
— Inside NEM (@Inside_NEM) January 26, 2018
Established back in August 2012 by Yusuke Otsuka and Koichiro Wada, Coincheck deals with various crypto-currencies.
— bert (@bertmcgoogan) January 28, 2018
Japan implemented requirements for cryptocurrency exchange operators to register with the government back in 2017. Coincheck is reportedly undergoing registration screening.
Jules studied English Literature with Creative Writing at Lancaster University before earning her masters in International Relations at Leiden University in The Netherlands (Hoi!). She then trained as a journalist through News Associates in Manchester. Jules has previously worked as a mental health blogger, copywriter and freelancer for various publications.