Japan exchange Coincheck refund around $500m as hackers steal cryptocurrency

currencies: Japan-based virtual currency exchange Coin­check said it would refund about $US400 million ($493 million) to customers after hackers stole hundreds of millions of dollars’ worth of digital assets.

The company said it would use its own funds to reimburse the funds to all 260,000 customers who lost their holdings of NEM, the 10th biggest cryptocurrency by market capitalisation.

On Friday, the company detected an “unauthorised access” of the exchange, and later suspended trading for all crypto­currencies apart from bitcoin. The resulting $US530m loss exceeded the value of bitcoins that disappeared from MtGox in 2014. The major Tokyo-based bitcoin exchange collapsed after admitting that 850,000 coins — worth around $480 million at the time — had disappeared from its vaults.

The high-profile demise of MtGox failed to douse the enthusiasm for virtual currencies in Japan, which in April became the first country in the world to proclaim it as legal tender.
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Japan exchange Coincheck refund around $500m as hackers steal cryptocurrency
Bitcoin is highly popular in Japan.
Bitcoin is highly popular in Japan.

currencies: Japan-based virtual currency exchange Coin­check said it would refund about $US400 million ($493 million) to customers after hackers stole hundreds of millions of dollars’ worth of digital assets.

The company said it would use its own funds to reimburse the funds to all 260,000 customers who lost their holdings of NEM, the 10th biggest cryptocurrency by market capitalisation.

On Friday, the company detected an “unauthorised access” of the exchange, and later suspended trading for all crypto­currencies apart from bitcoin. The resulting $US530m loss exceeded the value of bitcoins that disappeared from MtGox in 2014. The major Tokyo-based bitcoin exchange collapsed after admitting that 850,000 coins — worth around $480 million at the time — had disappeared from its vaults.

The high-profile demise of MtGox failed to douse the enthusiasm for virtual currencies in Japan, which in April became the first country in the world to proclaim it as legal tender.

Nearly one third of global bitcoin transactions in December were denominated in yen, according to specialist website jpbitcoin.com.

As many as 10,000 businesses in Japan are thought to accept bitcoin and bitFlyer, the country’s main bitcoin exchange, saw its user base pass the one-million mark in November.

Many Japanese, especially younger investors, have been seduced by the idea of strong profits as the economy has seen years of ultra-low interest rates offering little in the way of traditional returns.

Major Japanese newspapers on Sunday labelled the management of virtual currencies at Coincheck as “sloppy” and said the company had “expanded business by putting safety second”.

Local media added the Financial Services Agency was expected to take disciplinary measures against Coincheck, which proclaims itself “the leading bitcoin and cryptocurrency exchange in Asia”, following the theft.

Coincheck had earlier said that it didn’t believe other cryptocurrencies traded on its platform were missing. However, it halted trading of currencies and withdrawals of yen for all customers, regardless of their holdings.
NEM, short for “New Economy Movement”, is one of the many alternatives to bitcoin that have taken off in value over the past two years. Launched in 2015 as an alternative to bitcoin, it resembles the latter in many respects, but has some features designed to make it less energy-intensive.

Until March 2017, NEM was worth less than US1c per token. Along with many other alt-coins, it rose sharply last year, hitting $US1.91, with a total market value of $US17.2 billion, on January 4.

Bitcoin fell as much as 7.3 per cent late on Friday, according to Coindesk, but recovered and was down only about 3.3 per cent by the weekend. Bitcoin last traded at $US10,874.80 each. Most of the other major currencies were down slightly, though NEM fell about 13 per cent, according to coinmarketcap.com.

The NEM cryptocurrency is built on NEM blockchain technology from the Singapore-based NEM Foundation.