Following the successful hacking and stealing of 500 million from CoinCheck NEM wallets , one of the Japanese largest cryptocurency trading platforms Friday, January 26, 2018, here are some of the things you probably want to know:
Coincheck hacking is the largest cryptocurrency theft in the history of digital currency. It has left the excos of the trading platform and its customers baffled.
The dollar amount stolen from Coincheck is greater than what Mt. Gox lost in similar attack in 2014. Mt. Gox’s own was pegged at $340 million at the time.
The trading firm has lost an estimated of 58 billion yen, that is approximately $533 million USD, at the time of the hacking. More facts are emerging every minute, but that’s the latest figure from CoinCheck’s President Wakata Koichi Yoshihiro and chief operating officer Yusuke Otsuka at a press conference.
CoinCheck lost such a huge amount because it kept vast majority of its funds in “hot wallets,” (online). Hot wallets are usually vulnerable to attack and hacking.
Cold wallet is adjudged to be safer than hot, because it’s stored offline and in secure locations.
CoinCheck executives admitted the security flaw, but said that “It was hard for us to manage cold wallet.”
It has also been discovered that Coincheck did not implement NEM’s multisignature smart contract system, which would have added an additional layer of security to the wallet.
500 million NEM tokens were taken from CoinCheck digital wallets, this means that all CoinCheck traders who had NEM in their wallet all lost their coins.
CoinCheck NEM hacking caused a sharp decline in market price in the cryptocurrency market. The hack forced XEM down from $1.01 to $0.85, data from CoinMarketCap says.
As expected, the company temporarily restricted deposits, trading and withdrawal of XEM, the token running on the NEM blockchain and other coins except bitcoin. But the fear might make some traders to even stop trading on the platform.
According to Nikkei Veritas, CoinCheck Cryptocurrency Exchange isn’t registered with Japan’s Financial Services Agency. Whether it’d be sanctioned it’s difficult to say at the moment, but we do know that this will make FSA to raise its registration requirements.
It’s reported that the hacker had moved 300,000 XEM tokens to another address. Both addresses had been flagged with a mosaic warning other exchanges not accept the funds.
CoinCheck (NEM) wallet hacking has nothing to do NEM foundation. The issue only affects the trading platform as result of security laxity.
CoinCheck plans to compensate its affected customers, no one knows how it plans to do that neither do we know right if it would be sanctioned by the regulatory body in Japan Financial Services Agency.
We’ll keep you updated as more facts emerge.