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Business
27 Jan 2018

Hackers steal $534.5 million from Japanese cryptocurrency exchange

Japanese cryptocurrency exchange, Coincheck said that on Friday, an attack by hackers led to around 523 million of the exchange's lesser-known NEM cryptocurrency coins getting transferred to another account without authorization.

Coincheck said that at the time of detection, the stolen coins were worth about 58 billion yen ($534.8 million).

Coincheck said that the hackers hadn't stolen any other cryptocurrencies.

In context

$534.5 million stolen by hackers from cryptocurrency exchange

NEM falls by over 20% after the hack

NEM is a cryptocurrency which intends to help businesses handle data digitally. According to CoinMarketCap, after the hack, NEM briefly fell by more than 20% before recovering to trade around 10% lower than its pre-hack price.

Over $600 million has already been lost to hackers

According to a mid-December estimate by Morgan Stanley analysts, bitcoins worth $630 million have already been lost to hackers. The Coincheck hack puts stolen cryptocurrency to at least $1 billion.

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Connection to internet made the NEM coins vulnerable

Storage security

Connection to internet made the NEM coins vulnerable

Coincheck's management, in a press conference, said that it had stored the NEM coins in a "hot" wallet, referring to a method of cryptocurrency storage linked to the Internet.

In contrast, leading US cryptocurrency exchange Coinbase reportedly keeps 98% of its cryptocurrency holdings in "cold" or offline storage for greater security.

Major hacks

Hackers have had multiple successes against cryptocurrency exchanges

This isn't the first major cryptocurrency hack.

In December 2017, South Korean exchange Youbit filed for bankruptcy after hack resulted in the loss of 17% of its total cryptocurrency holdings.

Earlier in 2014, Tokyo-based Mt. Gox filed for bankruptcy after it lost 750,000 of its users' bitoins and 100,000 of its own to hackers. Mt. Gox was the world's largest bitcoin exchange then.

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