Coincheck, one of Japan’s leading Cryptocurrency exchanges has confirmed last night that approximately $533 was withdrawn from the exchange in NEM tokens. Both the Exchange’s President Wakata Koichi Yoshihiro and COO Yusuke Otsuka held a press conference confirming the rumours. There are tweets from Nikkei which indicate more may have been stolen but as of yet are unidentified until the full investigation has been complete. Some rumours are stating up $723 million was the total funds stolen.
The rumours started Friday morning which caused a reaction sell off from many investors causing a drop in the price of almost 20% down to $0.82. Although indications are that the exchange’s low security for wallet transactions are to blame, there have been no other reports of any other currencies being impacted. It was also brought to light that coincheck was not registered with Japan’s Financial Services Agency, a step which it now plans to take.
This latest hack has dwarfed the previously largest hack of Mt. Gox in 2014 of which $340 million was reported stolen.
Again this brings to the forefront, security concerns about all cryptocurrencies which was reflected
in the total market cap dropping 10% within a matter of hours. Once more details were provided this
drop rebounded quickly so the 24hr drop is now sitting at only 4%. This, in fact, proves positive for
the cryptocurrency community as it shows more resilience then demonstrated in the past. This can
be brought down to a few factors.
Figure 2. shows the red arrow when the rumours occurred and the black arrow shows when the press conference occurred.
Clearly the market didn’t take long to rebound back after information became clear.
Firstly, there are now many more players breaking up the market share with coinmarketcap.com
displaying almost 1500 currencies currently. This will inherently provide more resilience when any
one coin takes a hit. Secondly, the community is still recovering from the recent crash caused by
announcements in both South Korea and China. This will have caused a lot of weak hands to pull out
of their investments and there is a good chance many of them will not have bought back in yet. This
leaves a much larger percentage of strong hands that are determined to HODL no matter what. This
latest hack would have little effect on many of these players.
Coincheck has announced that it has restricted all deposits, withdrawals and trades of XEM – the
token running on the NEM blockchain. Executives also stated that they are looking into
compensating its customers.
With funds continually being stolen, one must ask how can we secure ourselves to reduce the risk to
our own investment funds? There are a couple of steps you can take to help secure any coins you
1) Unless you are doing day trading or own small balances of any coins, then it is
recommended that you pull your funds out of any exchange and store them in an offline
wallet or even a physical wallet. Ideally you want it stored in anything that you hold the
private key for.
2) Whenever an exchange offers 2FA, always activate it. This could be google-authenticate,
SMS security or email security, or even as simple as some security questions. This will mean
that even if someone hacks your account, they are very limited in what they can do.
3) Don’t store your backups of wallets or passwords on your main PC. Ideally you would have
these written down in a notebook or kept on a HDD that is not connected to the internet.
4) Regularly login to your accounts and check balances and security checks in place. This
includes ensuring you have antivirus and firewalls setup.
The majority of funds that are stolen are with scams, like fake ICO’s etc. There are generally a fairly
low number of hacks occurring on exchanges compared to the number of exchanges and funds going
in and out each day. If you follow the above steps and ensure everything is up to date then you will
have a very low risk of having your funds stolen.
Joshua has been investing and trading in fiat currencies for a since 2013. he has recently moved into the crypto world
spreading his portfolio over long term coin investments, ICOs and day trading.