To clarify the situation Coincheck informed Japan News that the stolen coins were tracked as they were sent to many different accounts (as much as 20). NEM European promoter Paul Rieger created a bit of confusion when he stated for Reuters that the unidentified account is actually sending coins in batches of 100 (~US$83) to random accounts rather than other exchanges. With the help of the Foundation, the Japanese exchange and authorities managed to trace all the NEM coins to an unidentified account, and, according to NEM Foundation vice-president Jeff McDonald informed that owners of said account are now slowly moving the stolen coins to six exchanges.Ĭoincheck and the Foundation are trying to collaborate with the other exchanges in order to freeze all outgoing transactions that involve any of the stolen coins. The NEM Foundation assured the affected customers that the underlying protocol offers improved security that will enable authorities to track down the hackers if they try to move the stolen coin to other exchanges in hopes of transforming the cryptocurrency into fiat. It is also highly likely that we will see an increase of customers looking to take matters into their own hands and isolate their private keys offline with hardware wallets such as Trezor or Ledger.Last week saw the biggest heist ever recorded in the crypto world when hackers managed to steal more than US$500 million worth of NEM coins from Japanese online exchange Coincheck. Some regulators are already seeking to bring such exchanges under their purview and it is likely that others are likely to follow suit with the aim of imposing security requirements on them. Moving forward, cryptocurrency exchanges will be reviewing their own security setup and are likely to move to assure their customers that their coins are stored securely. ![]() The system will follow the money and tag any account that receives tainted money and NEM has already shown other exchanges how to check whether an account has been tagged. NEM is working on an automated tagging system to prevent the hackers turning the NEM coins to fiat currencies, or converting them into other cryptocurrencies. The FSA, however, has said it was not yet aware of how CoinCheck planned on doing so or, indeed, whether it actually had the necessary funds for such a large reimbursement. The FSA has also said it will consider on-site inspections if necessary.ĬoinCheck have stated that they will refund most of the coins stolen, promising to reimburse around $423 million to their customers. Whilst clearly a sensible precaution this move is likely to lead to further questions as if it was relatively straightforward to move Ripple, why had CoinCheck not already done the same with NEM?Īlthough interestingly the impact on the market appears to be significantly less than the Mt Gox incident (Bitcoin and Ethereum initially dropped 7% and 5% respectively but then bounced back relatively quickly), this hack will inevitably have substantial consequences.ĬoinCheck themselves have reported the matter to Japan's Financial Services Agency, as well as the police, and the FSA has set a deadline of 13 February for CoinCheck to report back on the cause of the hack, the prevention and risk measures CoinCheck will be putting in place as well as how they will deal with their customers. ![]() It has also been reported that, shortly after discovering the hack, CoinCheck moved around $110 million worth of Ripple to a more secure location in case the hackers were still able to access their systems. Questions are, however, likely to be asked as the NEM coins were stored in a simple hot wallet (a wallet connected to the internet and used for trading) as opposed to a more secure multisig wallet (where more than one key is required to authorise a transaction) or even a cold wallet (which takes the coins offline).ĬoinCheck does store other coins in multisig wallets, as well using cold wallets for the likes of Bitcoin and Ether, and apparently the plan was to store the NEM coins offline too. This would surpass the $400 million worth of Bitcoin that was stolen in the Mt Gox incident of 2014.ĬoinCheck is reportedly still trying to verify how the hackers were able to access the wallet where the NEM coins were stored but, it would appear, that the hackers were able to steal the private key for the wallet which then enabled them to withdraw the coins. In Friday's press conference CoinCheck admitted that the current understanding was that the hackers had stolen around 523 million of the exchange's NEM coins which, at the time of detection, were worth around $534 million. Japanese cryptocurrency exchange CoinCheck confirmed on Friday that it has been the victim of a massive hack, resulting in what would appear to be the largest cryptocoin theft of all time.
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