Crypto Markets Undergo Stress Test with the Coincheck Heist The Japanese exchange reacted quickly, and plans to reimburse affected accounts. by Christine Masters , 29 January Subscribe
In what looked ominously like another MtGox moment, the Japanese exchange Coincheck suffered a deep loss worth up to $600 million. But this time, Bitcoin was not the target – it was NEM (XEM) , a native Japanese blockchain platform that is quickly gaining fame. The theft has affected 260,000 exchange customers.
The XEM market price remained robust after the news, at $0.98, down around 6% in the past 24 hours, which in the world of crypto trading cannot be considered a crash, but normal fluctuation. Yet the effect over the weekend was clearly visible.
The recent value of lost NEM coins is somehow similar to the Parity funds locked into a multisig wallet. But because the attack is an outright theft, it is one of the most significant events in the sector. It even dwarfs the NiceHash theft of around $64 million, as well as the Bitfinex hack.
However, Mt. Gox remains the biggest crash in the history of cryptocurrencies, taking away 850,000 BTC, an unmatched before sum, lost in a concerted effort.
But this time, users will not absorb the losses – Coincheck has stated it would find a way to reimburse the affected accounts. However, the compensation would come from the exchange’s own cash funds. In case of a cash reimbursement, losing an appreciating digital asset may hurt owners in the future. Here’s the #NEM Foundation official statement about the $530 Million in XEM stolen from #Coincheck .
https://t.co/YSMjZZaSVd pic.twitter.
com/MhY3sFiUAy — NEM (@NEMofficial) 28 января 2018 г.
The Coincheck heist turned out to be the work of a hacker, attacking a Coincheck wallet directly.
However, Coincheck will also face scrutiny from the Japanese Financial Authority, to further investigate the issue and the source of the hack. At the moment, the exchange claimed ignorance on how the theft was achieved. In the past, thefts of large sums have either raised suspicions of an insider, or were the result of a phishing attempt, since wallets should be generally impossible to hack.
In the past days, thefts and losses are starting to affect altcoins more often. The theft will in fact work to elevate the NEM project to higher visibility: #NEM Foundation Vice President Jeff McDonald is going to be live on #BBC News in a few! Stay tuned! — NEM (@NEMofficial) 28 января 2018 г.
NEM prides itself on being a “production-level platform”. However, the recent news may raise questions about the features of the wallets, and the safety of the technology. According to Coincheck, the vulnerability was due to using a hot wallet for fast transactions, which lacked a multisig feature.
The NEM team has been working on a solution to tag the funds and not allow the coins to be moved or sold, as XEM is not a privacy coin. The team has refused to perform a hard fork and roll back the transaction.
Other recently hot coins that have seen attempts at stealing were Stellar (XLM) and Verge (XVG), though on a much smaller scale.
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