Worse Than Mt. Gox: Japanese Crypto Exchange Hacked, $530 million of NEM Stolen, Officially

Worse Than Mt. Gox: Japanese Crypto Exchange Hacked, $530 million of NEM Stolen, Officially

Recently happened what is believed to be the major crypto crack in the history. One of the largest Japan-based cyber money exchange platform CoinCheck writhed from the hacker attack. As a result, $530 million (nearly 58 billion of Japanese yen) of alternative currency NEM is currently missing. This has been informed by the platform’s executives, and it is also believed that this hack has overcome even Mt.Gox’s case, according to CCN.

Hot Wallet Trouble

Two company’s representatives took the floor at a formal open conference, acknowledging that the assets preserved in CoinCheck’s hot wallet disappeared. As the Japanese digital money analyst MineCC informed, the executives pointed out at a team of unidentified hackers, who, according to their words, have stolen the capital.

It is remarkable that hot wallets, in contradistinction to cold ones, are not held offline, and they cannot guarantee qualitative safety. Therefore, this kind of wallets can be easily accessed, in case hackers managed to create a breach in servers. Usually, primary cyber money exchanges preserve only little fractions of capital in hot wallets, giving preference to the cold ones, as they are tough for hackers to crack.

Hence, appears a question: why did the exchange keep such a massive amount of funds in the insecure wallet?

“It was hard for us to manage cold wallet,” the executives found an excuse.

Coincheck executives at the conference concerning the hack.Image by MineCC

Despite the official announcement, that CoinCheck has lost $530 million in NEM, it is still unclear whether other cyber coins have been thieved or not.

What Will Happen Next?

As CoinCheck is one of the major Japan-based cyber money trading platforms after BitFlyer, apparently, investors met the news with desperation. Furthermore, according to crypto analyst Joseph Young, both reporters and exchange’s clients are outraged by the fact that the executives refused to admit the platform was not foolproof.

Now, as the country’s Japanese Financial Services Agency has been informed about CoinCheck crack, it is expected that the official investigators will weigh in the case.

Nevertheless, the developers of altcoin NEM, which units have disappeared from the platform due to the breach, as well as the open-source development network, have reassured that no hard fork would take place in order to restore the missing capital.

Such a devastating hack occurred against the background that exchange market in Japan is one of the most significant in the world. For instance, its normal trading volumes surpass the rates of fellow platforms in South Korea and the US. All the exchanges in the country go through a rigorous licensing process so as to guarantee high standard safety measures and so on.