Japan-based digital exchange Coincheck to refund to customers after cyberheist

Coincheck announced it will refund about $400 million to 260,000 customers after the hack, the company will use its own funds.

On Friday the news of the hack of the Japan-based digital exchange Coincheck caused the drop in the value of the major cryptocurrencies, the incident had a significant impact on the NEM value that dropped more than 16 percent in 24 hours.

The company suspended the operations of deposits and withdrawals for all the virtual currencies except Bitcoin, the exchange announced it was investigating an “unauthorised access” to the exchange.

According to the company, the hackers stole worth half a billion US dollars of NEM, the 10th biggest cryptocurrency by market capitalization.

The hackers stole 58 billion yen ($530 million), an amount of money that is greater than the value of bitcoins which disappeared from MtGox in 2014.

Coincheck was founded in 2012, it is one of the most important cryptocurrency exchange in Asia.

The company announced it will refund about $400 million to customers after the hack.

Coincheck will use its own funds to reimburse about 46.3 billion yen to its 260,000 customers who were impacted by the cyberheist.

“At 3 am (1800 GMT) today, 523 million NEMs were sent from the NEM address of Coincheck. It’s worth 58 billion yen based on the calculation at the rate when detected,” said Coincheck COO Yusuke Otsuka.

“We’re still examining how many of our customers are affected,”

Experts believe that the Financial Services Agency will to take disciplinary measures against Coincheck.

It has been estimated that as many as 10,000 businesses in Japan accept bitcoin and bitFlyer, nearly one-third of global Bitcoin transactions in December were denominated in yen.The Cryptocurrencies, and in particular Bitcoin, are very popular in Japan, in April, the Bitcoin was proclaimed by the local authorities as legal tender.

According to Japanese bitcoin monitoring site Jpbitcoin.com, in November, yen-denominated bitcoin trades reached a record 4.51 million bitcoins, or nearly half of the world’s major exchanges of 9.29 million bitcoin.

Japanese media criticized the company blaming the management to have underestimated the importance of security of its investor, they said Coincheck “expanded business by putting safety second”.

Politicians and experts that participated in the World Economic Forum in Davos issued warnings about the dangers of cryptocurrencies, it is expected that government will adopt further measures to avoid abuse and illegal uses of cryptocrurrencies.

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Pierluigi Paganini

(Security Affairs – Coincheck, Security Breach)

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Pierluigi Paganini

Pierluigi Paganini is member of the ENISA (European Union Agency for Network and Information Security) Threat Landscape Stakeholder Group and Cyber G7 Group, he is also a Security Evangelist, Security Analyst and Freelance Writer. Editor-in-Chief at "Cyber Defense Magazine", Pierluigi is a cyber security expert with over 20 years experience in the field, he is Certified Ethical Hacker at EC Council in London. The passion for writing and a strong belief that security is founded on sharing and awareness led Pierluigi to find the security blog "Security Affairs" recently named a Top National Security Resource for US. Pierluigi is a member of the "The Hacker News" team and he is a writer for some major publications in the field such as Cyber War Zone, ICTTF, Infosec Island, Infosec Institute, The Hacker News Magazine and for many other Security magazines. Author of the Books "The Deep Dark Web" and “Digital Virtual Currency and Bitcoin”.