This article was originally published by Tyler Durden at Zero Hedge
Earlier today we reported that cryptocurrencies tumbled overnight after one of the most popular – if unlicensed – Japanese exchanges, Coincheck, halted withdrawals of funds and cryptos amid broad confusion as to what prompted the halt. Additionally, Coincheck said it had stopped deposits into NEM coins, a hint that something was very wrong with what until last night was the 10th-largest cryptocurrency by market value, and which tumbled nearly 20% overnight, dragging the rest of the sector lower as news of the Coincheck fiasco spread.
Speculation was rife: “Coincheck is a very well-known exchange in Japan,” said Hiroyuki Komiya, Chief Executive Officer of Tokyo-based Blockchain Technology Consulting. “We’ve seen several outages at various crypto exchanges recently, so the extent and seriousness of Coincheck’s halt isn’t yet clear. We’re all very eagerly awaiting to hear more detail on what’s happening.”
We didn’t have long to wait: shortly after the halt, theories started to emerge as to what may have happened, with some speculating that the exchange may have been hacked after noticing that a massive ($110 million) transfer from Coincheck’s Ripple wallet:
110 mil usd in #Ripple (XRP) were sent from the Japanese cryptocurrency exchange Coincheck to an unknown address. Hacking suspected. https://t.co/hmGhlSmJEH
— Costin Raiu (@craiu) January 26, 2018
And then, the worst case scenario was confirmed by Coincheck itself told financial authorities that it had lost 500 million NEM cryptocurrency coins in today’s cyberheist, which at the current exchange rate amounts to roughly $400 million, according to Nikkei.
NEM Foundation president Lon Wong also confirmed Coincheck was hacked, calling the stolen funds “the biggest theft in the history of the world”, as quoted by CryptoNews. According to Wong, the hack had nothing to do with NEM and the blame lies exclusively with Coincheck:
“As far as NEM is concerned, tech is intact. We are not forking. Also, we would advise all exchanges to make use of our multi-signature smart contract which is among the best in the landscape. Coincheck didn’t use them and that’s why they could have been hacked. They were very relaxed with their security measures,” Wong said.
“This is the biggest theft in the history of the world,” he added.
The hack, at recent NEMUSD exchange rates, would make it even bigger than Mt. Gox – which lost a total of $350 million in 2 hacks, one in 2011 and 2014 – by $50 million.
As noted above, Coincheck was one of the few crypto exchanges not registered with Japan’s Financial Services Authority – a regulator responsible for overseeing exchanges in the country – unlike the other prominent cryptocurrency exchanges, such as bitFlyer and Quoine. Furthermore, according to MineCC, CoinCheck used hot wallets not cold wallets, which are not secure.
Which may explain why local regulators are only now looking into what happened:
While little additional information was available as of this moment, Coincheck added that the hacked NEM was sent illicitly outside exchange, at which point the trail was lost however “no other issues found with other currencies on exchange.” Of course, the historic, nearly half a billion dollar hack is a big enough “issue.”
The Japanese exchange also said that it was “working hard to secure client assets”, and that it doesn’t know how many total coins were lost, adding that it was not clear if NEM losses were internal or external.
And while memories of the historic Mt.Gox hack suddenly rush front and center, Coincheck said that it plans to start trading of unaffected currencies. In retrospect that may not be a good idea.
Paradoxically, cryptocurrencies have risen as the Coincheck hack news spread amid expectations the thieves will convert their stolen NEM coins into another cryptocurrency.
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No big deal.
Instead of the Government stealing it, the hackers steal it.
The result is the same. It is not your money.
I still have my gold and silver. It’s hidden well. It is mine.
IOTA.
Steel, brass, lead, powder, land, garden, water, animals, Family, friends, and location are wealth. Money is merely a means to transfer wealth.
Pick your money wisely, lest you lose wealth.
rellik – you’re dead on right. I’ve been wondering when the target got big enough to attract hackers. Funny though, just how the hell do you steal digital money and then launder/use it? Personally, if I’d done the hack, I’d’ve just worm wiped the entire network.
The biggest theft in history was the theft of Russia by the 3ew bolsheviks led by Bronstein aka Trotsky, a New York 3ew. Making the 3ews the richest people in the world.
_
BA,
You know that is pure BS!
My great grandfather was a Jewish carpenter
in the Imperial Russian army. He died dirt poor.
Catholics took advantage of him his entire life.
It was how he immigrated, Catholic church
support. There is a church in Chicago with
doors he built, for free.
If you can’t do business, don’t blame an
entire race, for your failure.
Failure is always someone else’s fault.
The Jews are one of the more traditional someone else’s to blame your failures on.
Funny,
I always take credit for
my failures, when they
were failures I had
some control over.
I guarantee you I would
have never been stuffed
into a Death camp.
Relic & Anonymous:
Not every 3ew is wealthy. Non-the-less, the wealthiest family in the world, the Romanovs were murdered and their wealth, and that of the entire Country was stolen. The poor innocent 3ews were not victims, in this case they were perpetrators of one of the most heinous crimes in recorded history. This fact has been acknowledged. It is what it is.
What makes you think I am a failure? I have no need to make excuses. I’m quite proud of my accomplishments.
Putin made a deal with some of these 3ew thieves. He let them stay in Russia if they gave him part of the stolen loot. Those who refused him got locked up, but most co-operated. Putin gave some back to the Russians and he kept the rest. That’s why he’s a billionaire.
_
Humor an old man but I thought the whole idea of the blockchain distributed ledger technology was to prove chain of custody so as to make this sort of thing impossible.
If these “coins” can be stolen and USED then this is no different than e-mailing your credit card info. around.
Money is a means to transfer wealth.
Paper, gold, silver whatever.
Blockchain is like leaving a trail
of chicken food to your front door.
The stupidest chickens will find you,
and shit on the Lanai(porch).
I stay with Fiat cash.
Untraceable, that is its real
value.
How can one steal air?
Taxman!
Beatles song.
ha Ha HAHAHAHAHAHA
SOME WORDS OF WISDOM :
Crypto: The End of Freedom!
https://www.youtube.com/watch?v=1BfMFOd0-l0
Had to happen! Cryptocurrency was always somewhat ethereal and fuzzy in its concept but the hackers are very real and well-defined.
Waiting for the “bitcoin fanatics” to come along and tell us how it’s the currency of the future.
Been saying this all along…..if you can’t hold it in your hand, you don’t own it.
Sucker born every minute.