Coincheck, the Japanese cryptocurrency exchange, just fell victim to the largest digital currency hack in history. Coincheck executives verified that the hackers stole around $530 millions worth of a cryptocurrency called NEM.
Mt. Gox Dethroned
The previous record holder belongs to Mt. Gox, a cryptocurrency exchange based in Tokyo that closed its doors back in 2014. Mt. Gox was one of the largest digital currency exchanges in the world, but after hackers stole $450 million in Bitcoin, the company was unable to recover. They filed for bankruptcy soon after.
Security Breach Isolated to NEM
The cyber criminals in question only hacked Coincheck’s NEM wallet. Their other wallets remained secure. This brought some relief to the company’s clientele, may of whom feared the hackers had illegally accessed multiple wallets. Representatives of NEM made sure to clarify that the breach had nothing to do with the security of NEM’s cryptocurrency, and that Coincheck was the one liable for the breach.
Coincheck Relied too Heavily on Hot Wallets
Coincheck admitted that they kept too much funds in hot wallets. While most cryptocurrency exchanges store the majority of their funds offline, executives at Coincheck said they had difficulty managing so-called cold wallets, and instead opted to store the bulk of their funds online. This explains how the hackers were able to abscond with such a large amount of digital assets.
Coincheck maintained that they would continue operation and try to find some way to compensate their clients’ losses. They did not, however, explain how they would go about repaying their customers. In the meantime, the company has temporary suspended most trading, as they attempt to track down the missing currency.