A Japanese cryptocurrency exchange says it just experienced what may be the most financially damaging marketplace theft in the history of the technology.
The sum allegedly stolen from the Coincheck exchange 500 million units of NEM, a newer cryptocurrency was worth roughly $500 million USD at the time of the theft.
As a result, Coincheck has halted all operations and the price of XEM has tumbled nearly 10 percent at the time of writing. NEM is the tenth largest cryptocurrency according to CoinMarketCap.
Lax security measures protecting this smaller cryptocurrency seem to be at the root of this issue. Yuji Nakamura, a Bloomberg tech reporter based in Tokyo, attended the Coincheck press conference and tweeted the exchange was not using multi-signature — an additional layer of security for cryptocurrency transaction — for XEM transfers.
Main takeaways from Coincheck press conf:
– only NEM impacted
– plans to continue operating, restart trading
– not clear on plan to repay customers
– no multisig💀
– wouldn’t admit security was weak
– not sure how hacked, if domestic or foreign hackers
– CEO barely spoke
— Yuji Nakamura (@ynakamura56) January 26, 2018
“As far as NEM is concerned, tech is intact,” Wong told Cryptonews. “We are not forking. Also, we would advise all exchanges to make use of our multi-signature smart contract, which is among the best in the landscape. Coincheck didn’t use them and that’s why they could have been hacked. They were very relaxed with their security measures.”
These crypto-heists should be a huge red flag for exchanges and other businesses in the sector to seriously step up their security measures, else they risk making a market that has already been plagued with volatility more unstable than ever.