Cryptocurrency exchange Coincheck loses US$530 mln in hack

  • Cryptocurrency exchange Coincheck loses US$530 mln in hack

Cryptocurrency exchange Coincheck loses US$530 mln in hack

The price of NEM plunged nearly 20% after the theft came to light over the weekend, but it has since recovered those losses.

According to a company statement, hackers broke in around 02:57 Japan time, or 04:57 EDT, and carried out the largest crypto-theft in history.

It was exactly the kind of scene that the country's financial regulator had been hoping to avoid when it introduced a licensing system for cryptocurrency exchanges last April.

In 2014, Mt. Gox, another Tokyo-based virtual currency exchange, suspended operations on its exchange after a number of cyber attacks leading to bitcoin worth 48 billion yen (440 million US dollars) being stolen.

The FSA said it ordered Coincheck to submit an incident report and measures for preventing a recurrence by February 13.

According to Bloomberg, which refers to Coincheck representatives, the coins were sent "illicitly" outside the venue, while the firm is working to ensure the safety of all client assets. Coincheck said earlier it had suspended all withdrawals, halted trading in all tokens except Bitcoin, and stopped deposits into NEM coins.

"We realize that this illicit transfer of funds from our platform and the resulting suspension in services has caused vast distress to our customers, other exchanges, and people throughout the cryptocurrency industry, and we would like to offer our deepest and humblest apologies to all of those involved", Coincheck said in a statement. "We are tracing them and if we're able to continue tracking, it may be possible to recover them".

The disappearance is among the biggest losses or thefts of investor assets since the advent of digital currencies with the launch of Bitcoin in 2009.

The financial watchdog is considering administrative punishment for Coincheck under the financial settlements law, a source was quoted as saying.

Tokyo was also the location for the last major crypto theft when Mt. Gox the world's largest bitcoin exchange lost $460 million to hackers in 2014. At that time, the theft of Bitcoin was estimated at about $450 million, though the figure was revised down later. A lack of confidence in exchanges - most of which operate with little to no regulation - has prompted many institutional investors to spurn cryptocurrencies, although some are now dipping into the market after CME Group Inc and Cboe Global Markets Inc introduced Bitcoin futures in the U.S. last month. As a result, Coincheck falls under the supervision of the agency, an official said.

More recently, South Korean cryptocurrency exchange Youbit last month shut down and filed for bankruptcy after being hacked twice previous year.

Like Bitcoin, NEM is a cryptocurrency built on top of blockchain, but it uses a more environmentally-friendly method to confirm transactions, according to its website. While the safeguard failed to prevent a $65 million heist from Bitfinex in August 2016, NEM's blockchain had multi-signature functions that experts say would have made the theft more hard.