Ethereum Watch

In a massive January 26 theft, somewhere in the neighborhood of 500 million NEM tokens were stolen from the Japanese cryptocurrency exchange Coincheck.

A statement on the company’s website says that the funds were “illegally” transferred away from the platform, but that the culprit and their methods have yet to be identified. “As soon as the cause is known,” it continued, “we will take measures to prevent recurrence.” In spite of the robbery, the firm apparently does not intend to shut down.

At the time that the theft was detected, the 58 billion yen worth of funds reportedly taken were worth a little over $500 million, and would have represented around five or six percent of the nearly 9 billion NEM tokens in existence.

Though some media outlets have reported the theft as the greatest in the history of cryptocurrency, the value at press time of the 650,000 bitcoin (a conservative estimate) that were stolen from the MtGox exchange, which was headquartered in the same Tokyo neighborhood as Coincheck, totaled over $7 billion.

Since announcing the robbery, the exchange has suspended a range of services, including the deposit of NEM tokens to the platform; the withdrawal of any funds, including those denominated in yen; the sale and purchase of all cryptocurrencies with the exception of bitcoin; and certain credit card and convenience store payment services.

In a late night press conference held on the day of the incident, a Coincheck executive did not directly answer a question about whether the firm’s security was weak, but did apologize by way of response, according to a reporter who was present.

Coincheck personnel also told attendees that the only assets stolen were NEM tokens; that it intends to work on refunding stolen customer funds, at least in part, though it is not yet sure how it might do this; and that the exchange had not been using NEM’s multi-signature smart contract, which could have enhanced security.

The NEM team was reported to have said that it will not pursue a hard fork in order to restore the stolen funds, but that it is planning on “tagging” the affected tokens, presumably in a bid to make them harder for the thief or thieves to unload.

An article by Bloomberg relates that Coincheck had applied for a license with Japan’s Financial Services Agency. Though its application has still not been approved, the regulator’s rules allow the exchange to continue operating until a decision is reached, meaning that it was legally under the agency’s supervision when the theft occurred.

Adam Reese is a Los Angeles-based writer interested in technology, domestic and international politics, social issues, infrastructure and the arts. Adam is a full-time staff writer for ETHNews and holds value in Ether and BTC.

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