Shortly after the breach, the company halted all withdrawals from the site, hoping to stop any further damage to its funds. The ‘inappropriate’ movement of the funds was reported by Coincheck to Japan’s Financial Services Agency, as well as the police later on the same day. No other cryptocurrencies, including Ripple (XRP), were stolen, contrary to the early reports covered by Cointelegraph.Īccording to the exchange’s representatives, the hackers have managed to steal the private key for the hot wallet where NEM coins were stored, enabling them to drain the funds.Īll the stolen money belonged to the customers of the exchange. NEM stored on hot wallet, private key stolen 26.įollowing the hack, the Coincheck exchange has hosted a press conference, attended by Cointelegraph’s Japanese correspondents, to provide the details of what has happened and what’s coming next.
The coins were stolen via several unauthorized transactions from a hot wallet at 3:00 am local time on Friday, Jan. Officials have said cryptocurrencies are used by criminals to launder money.īitcoin, the world's largest cryptocurrency, skidded 11 percent on Thursday to its lowest since November, as a Facebook ban on cryptocurrency adverts and a growing regulatory backlash against the nascent market frightened investors.īitcoin extended its slide to $8,639 on Friday after skidding a day earlier to as low as $9,022 on the Luxembourg-based Bitstamp exchange, less than half the peak price of almost $20,000 it reached in December.Japanese cryptocurrency exchange Coincheck, one of the largest in the country, was the victim of a massive hack resulting in a loss of 523 mln NEM coins, worth approximately $534 mln. Last year's explosive rise in the value of digital coins and the flood of new retail investors drawn to the market have rattled global regulators nervous about a sector used largely for speculation. A Tokyo Metropolitan Police Department spokesman declined to comment.Īuthorities in several countries are also investigating last week's heist involving the NEM cryptocurrency, a member of the foundation behind the digital coin said on Thursday. The FSA has said it had yet to confirm whether the company had sufficient funds for the reimbursement.Ĭoincheck has turned over communication records to police in Tokyo investigating the heist, the Nikkei business daily said on Thursday. More recently, South Korean cryptocurrency exchange Youbit shut down and filed for bankruptcy after being hacked twice last year.Ĭoincheck said on Sunday it would repay about 46.3 billion yen ($425 million) of the virtual money. Gox, which once handled 80 percent of the world’s bitcoin trades, filed for bankruptcy after losing bitcoins worth nearly half a billion dollars to a hacking attack. The FSA has already conducted an interview-based hearing with Coincheck but questions remain, a source with direct knowledge of the matter told Reuters on Friday. But Friday's surprise inspection was conducted ahead of the deadline to "ensure protection of users," Finance Minister Taro Aso told reporters. The regulator said on Friday it had ordered all cryptocurrency exchanges to submit a report on their system risk management.Ĭoincheck had been ordered to submit a report on the hack and measures for preventing a recurrence by Feb.
The FSA earlier this week issued a business improvement order to Coincheck and said it would investigate all cryptocurrency exchanges in Japan for security gaps following the hack.
The theft highlights the vulnerabilities in trading an asset that policymakers are struggling to regulate, as well as the broader risks for Japan as it aims to leverage the fintech industry to stimulate economic growth. Japan last year became the first country to regulate exchanges at the national level - a move that won praise for boosting innovation and protecting consumers, contrasting sharply with crackdowns in South Korea and China. The regulator's knowledge of flaws in Coincheck's systems before the theft will likely draw further focus on Japan's approach to regulating cryptocurrency exchanges.
The exchange was also not using an extra layer of security known as a multi-signature system. on Friday, focused on compensation for customers, financial conditions and system management at the exchange, and Coincheck's efforts on consumer protection, a senior FSA official said.Ĭoincheck has said the virtual coins were stored in a "hot wallet" instead of the more secure "cold wallet," which operates on platforms not directly connected to the internet.
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