Coincheck will reimburse 260,000 customers worth $400m (£282m) after cryptocurrency theft
Coincheck, a Japan-based cryptocurrency exchange said it would use its cash to reimburse about $400m (£282m) stolen by hackers to the 260,000 people who lost their holdings of NEM, the world’s 10th-biggest cryptocurrency by market capitalisation.
On Friday, the company detected an “unauthorised access” of the digital exchange and later suspended trading for all cryptocurrencies apart from bitcoin.
The theft underscores security and regulatory concerns about bitcoin and other virtual currencies even as a global boom in them shows little signs of fizzling.
Coincheck said its NEM coins were stored in a hot wallet instead of the more secure cold wallet, which is kept offline, because of technical difficulties and a shortage of staff capable of dealing with them.
NEM is a digital currency like Bitcoin, Ethereum, or Litecoin, and is presently the eigth-largest cryptocurrency by volume.
TechCrunch describes the currency as a “distributed ledger platform primarily aimed at enabling payments and other financial services.”
Coincheck has described itself as Japan’s largest bitcoin exchange based on trading volume. On Friday, it halted withdrawals of all cryptocurrencies and yen after the hack.
The losses in the apparent heist, if confirmed, would likely go down as the largest in the nine-year history of bitcoin and digital currencies.
According to Reuters, two sources with direct knowledge of the matter said Japan’s Financial Services Agency (FSA) sent a notice to the country’s roughly 30 firms that operate virtual currency exchanges to warn of further possible cyber-attacks, urging them to step up security.
The financial watchdog is also considering administrative punishment for Coincheck under the financial settlements law, one of the sources said.
Nearly one-third of global bitcoin transactions were denominated in yen last month, according to the specialist website jpbitcoin.com.
Japan started to require cryptocurrency exchange operators to register with the government last April.