The Japanese cryptocurrency exchange, Coincheck, was recently hacked, and over $523 million of NEM was stolen. At the time of detection, the stolen coins were worth ¥58 billion. This translates to roughly $534.8 million. The main reason for the hacking was because the exchange kept their assets in a hot wallet, more commonly known as a method of storage that is linked to the Internet. The cryptocurrency is lesser-known in the cryptocurrency world. In comparison, Coinbase, which is a leading U.S. exchange, stated that 98% of its digital currency holdings are held offline, or in “cold” storage.
As a result of the hacking, the exchange immediately halted the trading of all currencies, including yen. The trading of other cryptocurrencies other than Bitcoin was also restricted. NEM is the cryptocurrency, which intends to help businesses handle data digitally. The NEM was the main target of the hack as it did not appear that the hackers had stolen other digital currencies, which were being traded on the exchange. This hack is following news in December 2017 that a cryptocurrency exchange called Youbit lost over 17% of its digital assets. Subsequently, its parent company Yapian filed for bankruptcy.
Another high-profile case is the Mt. Gox hack. It is a Tokyo-based cryptocurrency exchange, which filed for bankruptcy in 2014. This was one of the largest cryptocurrency exchanges, and it was the largest Bitcoin exchange at the time. However, Japan has maintained a friendly stance toward cryptocurrencies even with large-scale hackings happening in their country.
Bitcoin prices rebound following the hack
The Coincheck hack has successfully surpassed the scale of hacking on Mt. Gox. Initially, the cryptocurrency stated that over 500 million units, worth about 58 billion yen, had been stolen from customers’ wallets. However, the stake estimation has decreased since then to $430 million. The cryptocurrency is trying to figure out what exactly happened and identify the source of the attack.
Notably, other cryptocurrencies were not impacted. Critics believe that the hack was because of Coincheck’s lack of multi-sig wallets where multiple keys are needed to authorize a transaction. And the result, this exposed the exchange to hackers. The extent of the hack is huge as it surpasses the Mt. Gox breach.
In cryptocurrency, security risks and hacking continue to be a concern for cryptocurrency investors. In fact, the high-security risks have been warding off potential investors from entering the cryptocurrency market. This concern was mirrored by the price movement of the cryptocurrency market as Bitcoin prices dipped.
The cryptocurrency market today is more alert to what is going on in the market as compared to years before. However, Bitcoin prices after the Coincheck hack were quick to rebound, even if it took a dip because the extent had not affected much of the total market capitalization. Perhaps the fact that NEM was a lesser-known cryptocurrency has helped the market to recover quickly.