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Coincheck hacked, biggest theft in the history of Cryptocurrency

Coincheck, popular Japanese crypto exchange was hacked this morning, and 526 million XEM coins worth a whopping $400 million (at least) were stolen. Sources suggest that the hack could be even bigger, probably moving beyond $700 million. The President of Foundation, Lon Wong talked about this issue, suggesting that the hack has nothing to do with NEM. He also blamed Coincheck for the hack exclusively.

Coincheck has halted transactions for all currencies on their platform, except for bitcoin.

The official blog update says:

Update: 6:19 pm (JST), 1/26 1

Currently, credit card, Pay Easy, and convenience store payments are suspended. We sincerely apologize for these inconveniences and will continue to do our best to be back to normal operations as soon as possible.

In the meanwhile, the Japanese media is flocking to the headquarters of the exchange. Note that Coincheck is one of the largest crypto exchanges in Japan but is not registered with the Financial Services Authority, unlike its peers.

The sequence of events in the hack

At first, the exchange abruptly restricted NEM deposits to its accounts. In a blog post released by the exchange, the users were advised to refrain from depositing any coins in the account until further notice. The exchange also informed the users that NEM deposits will not reflect in their accounts if they do so. It appeared that the exchange has run into problems with an altcoin NEM and its support was not fully integrated.

The exchange quickly restricted all transactions include purchase and sales for NEM and finally restricted withdrawals as well. Finally, the exchange stopped all withdrawals for all currencies, both fiat and digital. The exchange then posted another blog informing the customers about the problems and the withdrawal restrictions.

The exchange began shutting operations down after this. Some reports have suggested that 101,265,057 XRP (Ripple) coins which are worth at least $123.5 million were shifted from the Coincheck wallet. Some unconfirmed reports also suggest that NEM coins worth at least $600 million have left the exchange.

NEM head honchos blame Coincheck

Lon Wong, Foundation President, said that the entire blame of the hack rests solely on Coincheck. He also assured investors that there is nothing wrong with the NEM tech. However, in his statements, he said that this could be the biggest hack the world has ever seen.

“As far as NEM is concerned, tech is intact. We are not forking. Also, we would advise all exchanges to make use of our multi-signature smart contract which is among the best in the landscape”, said Wong.

He also said that Coincheck had questionable security measures stating that if the exchange used NEM’s security practices, they would not have been hacked.

According to him, only one account is associated with this hack and Coincheck will track it down. Wong was one of the first people to report and confirm the hack. Following the reports, XEM coin’s price plummeted by 18.46 percent. The coin was selling at $0.78. The rumor mill is abuzz with news related to this hack. Many of them don’t believe it is a hack, mentioning that a large investor could have possibly moved their coins.

About the author

Kyle Hill

Health optimizer, cryptographer, bona fide aesthete. Ethereum-centric fan from Mother Russia. Here I represent solely my views and opinions on things. To know more about Kyle, follow him on Twitter.

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