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Crypto exchange to refund $500m after ‘hack of epic proportions’

Crypto exchange, refund, money bag

A major Japanese cryptocurrency exchange has pledged to reimburse the 260,000 users affected by the largest crypto theft in history, which occurred last Friday.

Coincheck announced on Sunday that the approximate 260,000 users affected by the theft would be refunded.

However, while the illicit transaction was valued at about 58 billion yen, or A$660 million, the amount refunded will be 46.3 billion yen or A$523 million.

According to a company statement, hackers broke in around 02:57 Japan time, or 04:57 EDT, and carried out the largest crypto-theft in history.

The second-largest theft, the Mt. Gox hack cost the Japanese Mt Gox Bitcoin exchange 48 billion yen in 2014.

However, the Coincheck breach was not detected until 11:25 Japan time.

The hack targeted the NEM crypto currency; however the NEM.io Foundation vice president Jeff McDonald said the developers of the currency would be able to track the funds within two days.

NEM explained that the automated tagging system will follow the money and tag accounts that receive the stolen money.

Mr McDonald also commented: “The NEM Foundation is working on solutions to do the most we can to help Coincheck and also ensure the NEM community is protected.

“Due to the nature of NEM’s architecture and its advanced API, we are currently reaching out to exchanges and exploring three different options. Due to the exact nature of these options and the security concerns around them, we have no further comment on how we are actively working to address this situation at this time.

“We hope everyone can understand that while we believe the community deserves to know everything we are doing, we also believe it is in the community’s best interest to not publicly discuss the full detail our actions considering the security needed around our solution.”

According to NEM’s Alex Tinsman, the hack was of “epic proportions”. Nevertheless, it had “nothing to do with NEM but rather Coincheck’s lack of strong security measures”, she said in a series of tweets.

The Inside NEM host argued that the if the exchange had used a “multisig” wallet which requires more than a single signature to authorise a transaction, and if the funds had been held in a cold wallet which is not connected to the internet, rather than a hot wallet, which is connected to the internet, the “hack couldn’t have happened”.

Coincheck said it acknowledged that the breach had caused “immense distress” to customers, exchanges and participants in the cryptocurrency sphere, and said it offered its “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.”

As it stands, the theft has been limited to NEM, Coincheck said. However, the exchange has restricted dealings for its other currencies as a precaution.

Crypto exchange to refund $500m after ‘hack of epic proportions’
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