World’s Largest Crypto Theft Led To Cryptocurrency Trading Being Stopped

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On the 26th of January at 3 AM, millions of dollars’ worth of cryptocurrency vanished from a Japanese exchange.

The Tokyo, Japan based company named Coincheck, Inc. revealed the theft of the cryptocurrency NEM — which obviously isn’t as well-known as the cryptocurrency bitcoin—but still quite popular. They blamed the theft on “unauthorized access”.

The amount stolen is about 380 million British Pounds, which converts to roughly $534 million dollars, give or take—or roughly 46.3 billion yen!

Image Source: cryptocompare.come

It was one of the largest thefts of cryptocurrency ever. The theft was so serious that the company had to temporarily suspend all withdrawals of cryptocurrency last Friday, with the exception of bitcoin.

Naturally, everyone is very concerned about the security of cryptocurrencies; if you weren’t before, you should be now. Regardless, it doesn’t seem as if bitcoin or the other cryptocurrencies are going anywhere. If they are a trend, they’re probably not a trend that will fizzle anytime soon.

The assets that disappeared due to the hack belonged to customers of Coincheck, Inc. The operator only became aware of what transpired eight hours later.

The cryptocurrency exchange said that roughly 260,000 customers were impacted by the hack.
On Sunday, it was revealed that Coincheck, Inc. intends to repay most of what was lost to those affected by the heck. It will repay $425 million, or just about 90 percent of what was lost.

Exactly how and when that will be done has yet to be determined.

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At a press conference in Tokyo, the president of coin check—Koichiro Wada—apologized for what happened and the impact that the crime it had on his many customers. He explains the hack by saying the coins stolen were kept in a ‘hotel wallet’, not a ‘cold wallet’; the cold ones happen to be a lot more secure, but according to the company technical difficulties as well as a lack of capable staff prevented the coins from being stored in a cold one.

A hot wallet is part of an exchange that is connected to the internet. In cases of cold wallet storage, the coins are stored offline

The company might know the digital address to which the cryptocurrency was sent, which means it is possible that the loss assets will be recovered. The president of Coincheck Inc. says that the lost currency is being traced, and Coincheck hopes to be able to continue tracking it.

We don’t know when trading will return to normal, but we do know that the NEM price dropped substantially after the hack was revealed. It fell 11 percent. Bitcoin also dropped 3.4 percent on Friday.

While this is a major loss, it isn’t the first time. Back in 2014, another Toyko-based company named Mt. Gox lost about 500 million dollars’ worth of Bitcoin. It ended up having to file for bankruptcy as a result. A South Korean exchange called Youbit had to shut down more recently after being hacked twice last year.

The Financial Service Agency in Japan, also known as the FSA, has warned several companies about the possibility of future attacks. The 30 or so companies were advised to improve their security measures. Sources have suggested that the FSA may be considering punitive actions against Coincheck, Inc. due to the country’s financial settlement law.

Coincheck Inc. was founded in Tokyo back in 2012, and as of late summer of last year it employed about 70 people.

Cryptocurrency exchange operators have had to start registering with the Japanese government as of last year.
Last week, during a meeting in Davos, Switzerland, world leaders expressed concerns about the dangers associated with cryptocurrencies. The United States Treasury Secretary weighed in, saying that Washington is concerned about the possibility of various cryptocurrencies being used for criminal activities.

For those unfamiliar with cryptocurrencies, I’ll try to sum up what they are as briefly as possible. They are a medium of exchange that utilizes cryptography in order to secure transactions and also transfer assets, etc. Transactions of the currencies, which are “mined”, are monitored via a network of computers around the world, utilizing a technology known as blockchain.

In short, cryptocurrencies like bitcoin and NEM are virtual currencies—an alternative currency to the dollar, pound, yen, and others around the world.

An increasing number of businesses are taking bitcoin and other cryptocurrencies, particularly in Japan. It has been estimated that up to 10,000 businesses throughout the country take cryptocurrencies.

H/T – Source

Written by Kevin Barrett

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