Hacked Crypto Exchange CoinCheck to Repay Owners $400M

Hacked Crypto Exchange CoinCheck to Repay Owners $400M

Japan cryptocurrency exchange CoinCheck announced today that they would return about $400M of digital currency they lost on Friday in the world’s biggest crypto hack.

CoinCheck’s executives also announced that the exchange would compensate the roughly 260,000 owners of NEM coins in Japanese yen.

CoinCheck announced on Friday that it had fallen victim to the biggest breach in cryptocurrency history, which resulted in a loss of $400 million worth of NEM tokens.

CoinCheck president, Waka Koichi and Chief Operating Officer, Yusuke Otsuka confirmed in a press release that about 500 million XEM tokens worth around $400 million were stolen. NEM is a distributed ledger focused on providing financial services. It is the 10th largest cryptocurrency by market cap.

Following the hack, CoinCheck halted all of its operation which therefore caused the price of XEM to tumble from $1.01 on Friday to $0.83 (according to CoinmarketCap).

Long Wong, Foundation president NEM said that his organization was doing everything they could to help. Wong noted that the attack would not have occurred if CoinCheck used NEM’s multi-signature smart contract for XEM transactions.

“As far as NEM is concerned, tech is intact,” Wong said. “We are not forking. Also, we would advise all exchanges to make use of our multi-signature smart contract, which is among the best in the landscape. Coincheck didn’t use them and that’s why they could have been hacked. They were very relaxed with their security measures.”

The cryptocurrency theft is said to be greater than the one suffered by Mt.Gox in 2014. However, considering the current price of Bitcoin, the Mt.Gox hack had a bigger impact.

Such incidents are a warning to all the exchanges to secure their tokens inside a hardware or a personal wallet rather than leaving them unsecured on the exchange for hackers to get their hands upon.

This isn’t the first, nor the last cyber hack targeted at a cryptocurrency exchange. It’s just the latest entry in a long string of breaches. In November, Tether, a startup working with Bitcoin exchanges said that it lost $31 million to cyber attack. In December another South Korean Bitcoin exchange, YouBit, filed for bankruptcy as it lost about 17 percent of its total assets after getting attacked by the hacker for the second time in a year.

Japan’s Financial Services Agency (FSA) sent notice to country’s cryptocurrency exchanges to warn of future cyber-attacks, insisting them to upgrade the security.

Japan is the first country to license cryptocurrency exchanges. 11 Bitcoin exchanges were issued licenses in September. CoinCheck has also applied and is currently waiting for a license.

Also Read: YouBit: Bitcoin exchange to Declare Bankruptcy After Hack

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