Security & Vulnerabilities

Coincheck lose $530 million worth of cryptocurrency in biggest ever heist.

Coincheck lose 0 million worth of cryptocurrency in biggest ever heist.
Written by Agboola Sodiq

A popular cryptocurrency exchange in Japan has recently announced that hackers stole $530 million from its users.

This is the period in my life where i start to consider a switch in profession. My recent search history is full of search terms similar to “how to learn how to hack”, “where to learn hacking”. Like i can’t even start to convert to my local currency, the zeros are too much. The great part of this is that Coincheck has promised to refund all it’s users ( I know you’re thinking “before”) The Company said it would use its cash to reimburse about 46.3bn yen to the 260,000 people who lost their holdings of NEM.  That’s about 20% less than the total value of the virtual tokens that were stolen.

Before the hack at Coincheck, which bills itself on its website as “the leading bitcoin and cryptocurrency exchange in Asia,” it has detected an “unauthorized access” in it’s system which prompted it to suspend all activities and transactions. Coincheck has some blame for the hack anyway as it decided to store the coins in a hot wallet instead of the more secure cold wallet which is usually kept offline, Coincheck has had problem with shortage of staffs and could be one of the reasons behind the decision to use a hot wallet.

 

Image source: cdn.techjuice.pk

Coincheck said in a blog post that:

We realize that this illicit transfer of funds from our platform and the resulting suspension in services has caused immense distress to our customers, other exchanges, and people throughout the cryptocurrency industry, and we would like to offer our deepest and humblest apologies to all of those involved. In moving towards reopening our services, we are putting all of our efforts towards discovering the cause of the illicit transfer and overhauling and strengthening our security measures while simultaneously continuing in our efforts to register with the Financial Services Agency as a Virtual Currency Exchange Service Provider.

The Japanese government has promised to ensure Coincheck improve it’s services after the hack and would supervise and ensure the company respond to the theft in the best possible way. This hack on Coincheck is one of the numerous hacks that has befallen so many digital currency exchanges. Hackers are taking advantage of the young  exchanges that handles huge sum of money.

 

Managers of Coincheck bowing in apology at a news conference following the exchange’s loss of $530 million in cryptocurrency in a hack.

Another hack of similar financial weight crashed Mt Gox, which at that period was biggest cryptocurrency exchange. Hackers stole an estimated $400 million worth of Bitcoin from the exchange. Mt Gox went bankrupt immediately and till date affected users haven’t gotten their lost money back. The meteoric rise in the value of Bitcoin over the past few years would make hackers more interested. Last month too, Bitcoin exchange in South Korea , Youbit filled for bankruptcy after it was hacked twice in two months.

In another heist, hackers took off with more than $70 million worth of bitcoin from a digital currency trading platform based in Slovenia called NiceHash.

Countries like China has banned bitcoin trading in the country while Japan has decided to embrace the digital currency by officially recognizing it as a form of currency in the country.

 

On Sunday, major newspapers in the country labelled the management of virtual currencies at Coincheck as “sloppy” and said the company had “expanded business by putting safety second”.

 

 


Also published on Medium.

About the author

Agboola Sodiq

To the outside world, I'm just an ordinary geek. But in secret, I work to make my world information-safe. In order to succeed, I must become someone else... I must become something else.