Hacked Tokyo cryptocurrency exchange to repay owners $425 million

Leigh Mccormick
February 2, 2018

The FSA ordered improvements on Monday to operations at Coincheck, which on Friday suspended trading in all cryptocurrencies except bitcoin after hackers stole 58 billion yen ($532.40 million) of NEM coins, among the most popular digital currencies in the world.

Vice President of NEM Foundation Jeff McDonald, has said that they would be cooperating with Coincheck in the further investigative process but denied the possibility of any "hard fork" where administrators change the transaction history in order to restore the previous status before any sort of unauthorized access.

Coincheck Chief Operating Officer Yusuke Otsuka said the stolen funds had been kept in a "hot wallet" - a part of the exchange which was connected to the internet, rather than one secured offline.

"The latest theft will have two immediate effects: more regulation by authorities over exchanges and more recognition of the advantages offered by decentralized ways of trading", said David Moskowitz, co-founder of Indorse Pte in Singapore, which runs a social network for blockchain enthusiasts.

"We have APIs to track money [in] real time and share with exchanges", a company spokeswoman tweeted.

The firm also said that it would use company funds to reimburse the approximately 260,000 affected customers to the tune of 88.549 yen per token stolen.

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At least three dozen heists on cryptocurrency exchanges since 2011 are known; numerous hacked exchanges later shut down. "So the good news is that the money that was hacked via exchanges can't leave".

The heist awakened memories of the notorious hack of Japanese cryptocurrency exchange Mt Gox in 2014, which resulted in more than 850,000 bitcoin being stolen from the now defunct exchange. The regulator said there were now 16 registered crypto exchanges and 16 waiting for approval while operating.

Since 2011, there have been close to three dozen cryptocurrency exchange heists.

Cryptocurrency trading in Japan has spiked in the previous year, with the country's army of retail investors emerging as a major force in bitcoin's spectacular rally.

"Currently, 16 exchanges have received the approval of the FSA; 16 have yet to receive approval but can continue to operate while working towards completing the approval checks - and Coincheck was one of those still working towards approval", he said. Coincheck's application was made in September. "We are ing those exchanges", McDonald said.

"I deeply apologise to the customers we have troubled".

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