![]() ![]() The NEM coins were stored in a “hot wallet” instead of the more secure “cold wallet,” which operates on platforms not directly connected to the Internet, Coincheck said. The Financial Services Agency yesterday ordered improvements to operations at Tokyo-based Coincheck, which on Friday suspended trading in all cryptocurrencies except bitcoin after hackers stole 58 billion yen (US$534 million) of NEM coins, among the most popular digital currencies in the world.Ĭoincheck said on Sunday it would return about 90 percent with internal funds, though it has yet to figure out how or when. The theft highlights the vulnerabilities in trading an asset that global policymakers are struggling to regulate and the broader risks for Japan as it aims to leverage the fintech industry to stimulate economic growth. The incident is still pending police investigations and more information will be released soon.Japan’s financial regulator said yesterday it would inspect all cryptocurrency exchanges and ordered Coincheck to get its act together after hackers stole over US$530 million worth of digital money from its exchange in one of the biggest cyber heists on record. The stolen NEM and Ripple coins can be tracked through the blockchain ledger, meaning that the stolen coins could eventually be recouped, unless the hackers never intend to exchange the coins to fiat currency. Bitcoin did not register any negative price fluctuations since this Friday, so it looks like the Coincheck incident is nowhere near as severe as the Mt. Gox incident from early 2014 saw US$460 million worth (back then) of Bitcoins stolen, but the current total market cap of all cryptocoins increased from US$14 billion to US$500 billion ever since. NEM Foundation president Lon Wong confirmed the hack and called the incident “the biggest theft in the history of the world”. ![]() The exact circumstances of the incident have not yet been revealed, but, as with previous hacks, the stolen coins were apparently kept in an always online “hot wallet” on the exchange itself, instead of being deposited in a cold storage offline wallet. The exchange halted all Ripple transactions as well, and it is suspected that an additional US$123 million worth of XRP coins was hacked at the same time. It is estimated that a total of 523 million NEM coins were hacked, and Coincheck has already halted all related transactions. The last six months have seen quite a few “cryptoheists” as large sums of money got stolen from respectable exchanges or mining sites, however, in spite of all these problems, the crypto market cap continued to rise. Social and political factors are some of the sources that can lead to fear, uncertainty and doubt in the crypto world, and, while these are external forces that no one can accurately predict, all the security breaches that lead to stolen currency from online exchanges can be prevented and mitigated beforehand through improved measures. The cryptocurrency revolution is said to decentralize the financial power from large banking corporations and create new wealth for the average person, but all the security problems inherent to the digital medium it relies on may not make this a smooth ride at all. ![]() The Japanese exchange assured its 260,000 affected customers that it will refund the stolen money using its own capital, while the exact timing of the reimbursement remains to be announced at a later date, due to ongoing investigations. NEM is very popular in the Eastern Asian countries, with a total market cap of US$8.49 billion. Coincheck announced that more than US$500 million worth of NEM cryptocoins got hacked out of the online exchange last Friday.
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