Tokyo-based cryptocurrency exchange Coincheck Inc said on Sunday it would return about $425 million of the virtual money it lost to hackers two days ago.<\/b>
\nTOKYO \u2014 Tokyo-based cryptocurrency exchange Coincheck said on Sunday it would return about $425 million of the virtual money it lost to hackers two days ago in one of the biggest-ever thefts of digital money.
That amounts to nearly 90 percent of the roughly $533 million worth of NEM coins the company lost in an attack that forced it to suspend on Friday withdrawals of all cryptocurrencies except bitcoin.
In a Tokyo press conference, Coincheck Inc President Koichiro Wada said each trader who was affected by the hack will be compensated at a rate of $0.8147 cents per coin. Coincheck estimates that 260,000 traders were affected by the hack.
The theft underscores security and regulatory concerns about bitcoin and other virtual currencies even as a global boom in them shows little signs of fizzling.
Two sources with direct knowledge of the matter said Japan’s Financial Services Agency sent a notice to the country’s roughly 30 firms that operate virtual currency exchanges to warn of further possible cyberattacks, urging them to step up security.
The financial watchdog is also considering administrative punishment for Coincheck under the financial settlements law, one of the sources said.
Japan started to require cryptocurrency exchange operators to register with the government only in April 2017. Pre-existing operators such as Coincheck have been allowed to continue offering services while awaiting approval. Coincheck’s application, submitted in September, is still pending.
Coincheck told a late-Friday news conference that its NEM coins were stored in a «hot wallet» instead of the more secure «cold wallet,» outside the internet. Asked why, Wada cited technical difficulties and a shortage of staff capable of dealing with them.
In 2014, Tokyo-based Mt. Gox, which once handled 80 percent of the world’s bitcoin trades, filed for bankruptcy after losing around half a billion dollars worth of bitcoins. More recently, South Korean cryptocurrency exchange Youbit last month shut down and filed for bankruptcy after being hacked twice last year.
World leaders meeting in Davos last week issued fresh warnings about the dangers of cryptocurrencies, with U. S. Treasury Secretary Steven Mnuchin relating Washington’s concern about the money being used for illicit activity.<\/p>\n