$530 million lost due to hacking at Japan cryptocurrency exchange
- Author: Zachary Reyes Jan 27, 2018,
Jan 27, 2018, 22:17
According to Coincheck, the company's outstanding balance in NEM was found to have decreased dramatically on the morning of January 26. By 6:19 PM JST, all financial input and outputs-except for bitcoin-had ceased.
For Coincheck, it's now a matter of keeping other crypto-assets safe as they investigate what happened.
Users started suspecting something was wrong after Coincheck suspended NEM deposits earlier today, only to stop all NEM trading a few hours later, and then halting all payments on the entire site. It is believed the hacker stole nearly 7% of all NEM tokens now in circulation.
Nonetheless, the incident is yet another reminder of the risk of leaving tokens inside an exchange rather than a more secure option such as a personal wallet or hardware-based option. According to the firm, the money was stolen as it was kept in a "hot wallet".
What's more, while the onramps for cryptocurrencies remain rickety, the markets have learned to differentiate them from the superhighways they connect to. In total there were 500 million NEM tokens taken in the heist worth about $400 million, according to Bloomberg. While that may be peanuts compared to the 30 trillion yen or so once held by Bitcoin, the largest of any digital currency, NEM was popular with individual investors.
Unlike regulators in China and South Korea, which are cracking down on the crypto market, Japan has taken a more embracive approach, which saw legislators accepting bitcoin as a legal form of payment previous year.
Cryptocurrencies slid overnight after one of Japan's most active Bitcoin venues - Coincheck - halted client withdrawals, spooking investors in a country that's still wary four years after the collapse of Mt. Gox. Other estimates peg the loss a bit lower at around $420 million, and some have it as high as $600 million. Coincheck didn't use them, and that's why they could have been hacked. To return lost assets, the ethereum blockchain was hard-forked. "The calculation period is the weighted average price from NEM's suspension of trading at Coincheck to this release, and will be refunded in JPY", Coincheck announced (via Google Translate).