Hackers stole $400 million from Coincheck
Deposits and withdrawals stopped, plus trading remains on hold for all digital currencies except bitcoin.
Japanese cryptocurrency exchange Coincheck revealed that it has fallen victim to an enormous heist. Hackers made away with more than US$400 million in NEM tokens, stolen from Coincheck users’ digital wallets.
Coincheck is one of Japan’s most popular virtual currency exchanges, along with Tokyo-based BitFlyer.
Coincheck president Wakata Koichi Yoshihiro and chief operating officer Yusuke Otsuka confirmed the incident during a press conference, Bloomberg reported, revealing 500 million NEM tokens were illegally removed.
The executives said they “deeply regret” the incident. It is not yet known when or if the exchange will fully resume operations, however, Coincheck said it plans to return to “normal operations as soon as possible”.
The incident has been reported to Japan’s Financial Services Agency, as well as law enforcement authorities.
Coincheck discovered the breach a little after 11 a.m. ET Friday January 26. Soon after, the exchange halted deposits and withdrawals in all currencies. Trading remains on hold for all digital currencies except bitcoin.
Additionally, all credit card, Pay Easy and convenience store payments have been suspended.
Nikkei Asian Review reports that Coincheck hasn’t yet determined exactly how many customers were affected by the breach and that the exchange is considering a range of responses, including offering compensation.
The cause of the vulnerability hasn’t yet been revealed, though reports have noted that the virtual funds were stored in an internet-accessible “hot wallet”, rather than a potentially more secure “cold” wallet.
At this stage, the hack exceeds the value of the US$390 million theft that caused the collapse of leading Japanese bitcoin exchange Mt. Gox in February 2014. Since then Japan has tightened its crypto regulations.
From April 2017, crypto exchanges must register with the Financial Services Agency and manage user accounts separately from the exchange operator’s own funds. Coincheck applied to register but remains under review.
NEM.io Foundation president Lon Wong told cryptonews.com that as far as NEM is concerned, “tech is intact”.
“This is the biggest theft in the history of the world,” Wong said.
For now, he’s correct. In the last 24 hours since the theft NEM has lost about 12% in value, falling US$0.11 to US$.84 from a morning high of US$1.02. As of 9 P.M. ET January 26, 500 million NEM is valued at around US$412 million. However, given the volatility of cryptocurrencies the price of NEM tokens is constantly changing.
For example, in December bitcoin’s value sank 35% to US$12,200 in 72 hours. Today it’s worth just US$11,200.
Any customers affected by the breach can check the latest updates on Coincheck’s blog.
Japanese exchange bitFlyer was recently issued a Payment Institution (PI) license to operate in the European Union. The exchange is the only approved platform allowing trade with bitcoin’s largest trading market, Japan.