Coincheck lost $530 million worth of crypto coins to hackers

Jon Howard
January 28, 2018

A hacker managed to funnel out 500 million NEM coins, a value of more than $424 million Dollars, one of the exchange's co-founders said at a news conference in Tokyo Friday, according to. According to Cointelgraph, hackers stole the private key protecting access to Coincheck's accounts.

Though Coincheck is a major company among virtual currency exchanges, its registration at the Financial Services Agency is still under review, meaning it is not yet registered as a certified virtual currency exchange.

Coincheck confirmed Friday that the hack, now likely the largest ever in the space, occurred on its servers early afternoon local time in Tokyo. The amount may pale in significance to the cryptomarket's $550.5bn market cap, but it's yet another example of just how unsecure cryptocurrencies can be and gives regulators more reason to take a greater interest in cryptocurrencies and its dealings.

Regarding the fact that the NEM currencies had not been stored in a system that was cut off from outside networks, an official of the company said, "Though we have begun to take [protective measures], we were too late".

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An industry source said it is the norm for about 90 percent of customer assets to be managed in cold wallets.

"I'm shocked", Takeshi Fujimaki, an opposition Japan Innovation Party politician who once served briefly as an adviser to billionaire investor George Soros, said on Twitter. Many of these platforms are not regulated but multiple thefts have caught the attention of authorities around the world.

Depositing NEM on Coincheck is now being restricted. "It's hard to tell", ADM Investor Services International global strategist Marc Ostwald said.

After hours of speculation Friday night, Coincheck Inc. said the coins were sent "illicitly" outside the venue. Japan is the first country to license crypto exchanges, with its first 11 licenses handed out in September. Bitcoin mining requires significant computing power, while NEM does not. Coincheck was founded in 2012 by James Riney, Koiichiro Wada, and Yusuke Otsuka and is based in Tokyo.

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