One of the largest cryptocurrency exchanges in Japan lost at least $400 million in NEM tokens. The company, called Coincheck, told media that the coins were sent without permission.
Coincheck does not know how the tokens disappeared, but they are working to protect the assets of its customers. All withdrawals have been suspended. Trading, outside of Bitcoin, and deposits have also been halted.
“We know where the funds were sent,” Yusuke Otsuka, a Coincheck executive, said. “We are tracing them and if we’re able to continue tracking, it may be possible to recover them. But it is something we are investigating at the moment.”
Many are calling the hack one of the biggest thefts of digital currencies since the founding of Bitcoin in 2009. NEM is similar to Bitcoin because it is a cryptocurrency that is built with blockchain. However, it does not require the computing power that Bitcoin mining requires during the confirmation of transactions. The cryptocurrency is the 10th largest according to its market value. The news caused its value to fall by 11 percent last week.
Many people were shocked by the large theft while others believe that the investors should have used more precaution.
Takeshi Fujimaki, a Japanese politician, expressed his shock on Twitter. The legislator claims to have more than 10 million yen of Bitcoin through the company. Yvonne Zhang, on the other hand, had different sentiments towards the situation.
“Caveat emptor,” Zhang said. “The ‘investors’ that did not do due diligence and take time to understand what they’re trading in, both venue and subject matter, face unhedgeable risks. If they continue to ‘trade’ the same way knowing the murky nature of this market, they’re gambling.”
Japan is a large market for virtual currency and policymakers are working to protect investors throughout the country. Several legislators created a licensing system that would monitor local business. Coincheck was approved under the system as an exchange company and is under the supervision of the agency. Unfortunately, that has not stopped the large amounts of outages and breaches that exchanges, like CoinCheck, have faced. The country hopes that the system will prevent occurrences like the Mount Gox exchange collapse. The collapse led to an estimated $450 million in 2014.
“What’s the lasting impact? It’s hard to tell,” said Marc Ostwald, a global strategist. “Japan is one of the most pro-crypto trading countries, among the G-20. In Japan, they don’t really want a wholesale clampdown. So it will be interesting how Japanese regulators respond to this if they indeed do.”
Coincheck was created in 2012 in Tokyo, Japan. It currently has more than 70 employees. The exchange is working to rise in the world of cryptocurrency and has actively begun to advertise its’ services throughout the country. This level of theft will likely hinder the company’s success throughout Japan. It will be interesting to see how or if they are able to recover.