Coincheck Hacked For $535 Million In NEM Tokens

Home » Coincheck Hacked For $535 Million In NEM Tokens

In a stunning announcement made earlier today, Tokyo-based cryptocurrency exchange Coincheck revealed that the company was the victim of the largest cryptocurrency heist in history. According to a report published by Japanese newspaper Asahi Shimbun (and translated by Coindesk), the hackers made off with over 500 million NEM (XEM) tokens, worth roughly $535 million (58 billion yen) at the time of the theft.

Coincheck’s representatives confirmed that they were readying a plan to compensate customers for their lost NEM tokens, although no specifics appear to have been presented at this morning’s press conference. Coincheck also revealed that it was not registered with Japan’s Financial Services Agency, a surprising oversight for one of the country’s largest cryptocurrency exchanges. Coincheck has been in operation since August of 2014, launching mere months after the collapse of Mt. Gox.

The first indications of a problem at Coincheck occurred early this morning, when the exchange posted an “Urgent” notice that NEM deposits were being temporarily restricted. A short time later, additional announcements halting deposits and withdrawals of NEM were posted on the site. Within six hours of the original post, Coincheck had halted all cryptocurrency activity, as well as cash withdrawals.

The theft has the dubious honor of setting the new record for a cryptocurrency heist, dwarfing the $450 million lost when Mt. Gox was hacked in early 2014. It also remains likely that the full extent of the hack is unknown, as tweets by a reporter at the Coincheck announcement suggest that the company is still assessing the situation. Another estimate puts Coincheck’s total loss at something closer to 62 billion yen ($572 million), although this claim is unconfirmed.

Unlike the disastrous Mt. Gox hack, however, the Coincheck heist is unlikely to have a substantial impact on global cryptocurrency prices. The hack appears to have been limited to Coincheck’s NEM wallets, leaving balances of other tokens on the exchange untouched. While a $535 million loss is substantial, and may well spell the end of Coincheck itself, that amount only represents a fraction of NEM’s market cap. NEM prices have fallen today, from $1.02 to $0.85, but the news has yet to result in anything like a catastrophic price decline.

The reaction to the Coincheck hack provides a compelling, if unwelcome, indication of the cryptocurrency market’s new status quo. In just four years, the cryptocurrency economy has gone from being crippled for months over the half-billion dollar hack at Mt. Gox to shrugging off the effects of a near-identical hack within a matter of hours. Times have clearly changed.

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