Hackers steal $534m from Coincheck cryptocurrency exchange
The firm stopped trading after detecting “unauthorised access” on Friday (26 January), and froze deposits and withdrawals for all cryptocurrencies except Bitcoin.
Yusuke Otsuka, Coincheck’s COO, says it knows “where the funds were sent” and it is “tracing them and if we’re able to continue tracking, it may be possible to recover them”.
The stolen assets were retained in a hot wallet, i.e. the part of the exchange connected to the internet, as opposed to a cold wallet, i.e. funds stored offline.
Coincheck says it will use its own funds to compensate more than $423 million to the 260,000 users who lost their NEM cryptocurrency coins.
It has also reported the crime to the police and to Japan’s Financial Services Agency.
Those with good memories will recall MtGox, a Tokyo-based exchange that was forced to file for bankruptcy in early 2014 after hackers stole around $650 million worth of customers’ Bitcoins.
More recently, as reported in December, 170 cases of suspected money laundering linked to cryptocurrencies were reported by currency exchange operators in Japan in the six months through to 1 October 2017. Not a great advert, is it? The first such report by Japan’s National Police Agency (NPA) was conducted after the law on prevention of transfer of criminal proceeds was revised in April, requiring cryptocurrency exchange operators to report transactions suspected to be involved in money laundering.
Such crimes are not limited to Japan of course. One recent example is Slovenian cryptocurrency mining platform NiceHash. At that time, NiceHash said its payment system was “compromised and the contents of the NiceHash Bitcoin wallet have been stolen” and it is “working to verify the precise number of BTC taken”. Andrej Skraba, head of marketing at NiceHash, said around 4,700 Bitcoins — worth roughly $68 million at current prices — were lost in the hack.