With the rise of cryptocurrencies worldwide, people started moving towards a new form of money. Things were looking great, with prices rising and multiplying in value, to manufacturers starting to accept it as a form of payment. But the Crypto future looks troubling now.
The dawn of 2018 saw prices of high-end crypto leaders such as BitCoin fall. And while the new system was already facing issues, it’s now been subject to the biggest crypto theft in history. The crypto company NEM was the target. The steal? Well, it has been reported that the culprits managed to take approximately 380 million pounds. The company has listed the cause to be unauthorized access.
— NEM (@NEMofficial) January 29, 2018
The theft took place on 26 January at 3 am. And the operators only found out about the incident eight hours later. The theft has been listed as the biggest crypto theft of all time, and it caused Coincheck to suspend all trading/withdrawals on Friday except for Bitcoin. The company has been rumored to have disappeared overnight. The company also lost assets which belonged to the general public who purchased them.
Yusuke Otsuka and Koichiro Wada founded the company Coincheck back in 2012. It operates as a company that deals with other crypto-currency firms worldwide.
Coincheck, the company responsible has started to take the actions necessary. And one of the actions which are most important is compensation. The company owes money to 260,000 NEM coin owners and are going to pay them back at a rate of 88.549 yen (0.5756 GMP).
— Bitcoin News (@BTCTN) January 30, 2018
At a press conference, the president of Coincheck, Koichiro Wada apologized for the inconveniences caused to customers. He also explained the concept of cold and hot wallets. He stated that the NEM coins are kept in a hot wallet, which is less secure than the cold wallet. This happened due to technical issues and less qualified staff.
Bad couple of days for crytpocurrency world:
-CFTC subpoenas Bitfinex and Tether
-Coincheck gets hacked and loses over $500mm
-SEC halts alleged fraudulent Initial Coin Offering scam
— Joe Saluzzi (@JoeSaluzzi) January 30, 2018
The company made an official statement saying,
‘The timing of the reimbursement and the application process are currently under consideration,’
They also said,
‘The source of the refunded money is being carried out using our own capital.’
1/ Two interesting developments in @coincheck_en NEM hack:
1. Exchange will reimburse users for lost funds
2. NEM Foundation has flagged & frozen the hacked funds
That is a shortsighted move by NEM Foundation, shows they have control over network.https://t.co/PojLNma6K8
— Matt Odell (@matt_odell) January 29, 2018
There have been reports that suggest that the company knows the address of where the cyber-hack happened. They also said that they’ll use it to try and recover their lost money.
Japan’s Financial Services Agency (FSA) has already issued warnings to 30 other companies about possible cyber attacks on their crypto firms. The Agency is also considering imposing administrative punishments on the company Coincheck according to financial settlements law. Other than that, the agency has urged all firms to improve their security to prevent such thefts in the future.
The Japanese government was already working on urging crypto-firms to register with them in early 2017. After the hack, it has become apparent that tough regulations need to exist in this field as well. These regulations will help companies stay safe, and be able to conduct business on legal grounds and standards.
If you aren’t a trader, do NOT leave your crypto on an exchange. Ever.
This was THE BIGGEST HACK IN THE HISTORY OF CRYPTO and there *will* be more.
Airbitz rebranded into @EdgeSecure to specialize in SECURITY.
— Tiffany Hayden (@haydentiff) January 26, 2018
Some users have even suggested that leaving your crypto money with such firms is a risky business and one should avoid doing it. There have also been warnings of coming crypto-attacks so it’s better to be safe than sorry.