Japan Gives Coincheck a Deadline After $534 Million Cryptocurrency Theft

Japan’s financial security regulator urges Coincheck to submit a report on the $534 cryptocurrency theft through hacking, last Friday. FSA also requests the bitcoin wallet representatives so strengthen their security measures, and to confirm that they have enough funds for reimbursement by February 13th.

If necessary, the financial regulator will conduct on-site inspections of future cryptocurrency exchanges. In return, Coincheck representatives declared that they will strengthen customer protection, and develop risk management systems.

Friday, hackers who broke into a hot wallet system (less secure than cold wallet, which uses platforms that don’t connect directly to the Internet) stole 58 billion-yen ($534 billion) worth of NEM coins. Ironically, the stolen crypto-coins are visible, but without account owners’ names.

The Coincheck representatives are currently undergoing an investigation. They said that even if they cannot disclose the method of attack, this cryptocurrency theft was not an inside job.

What This Cryptocurrency Theft Reveals

The theft quickly became an international press subject and it emphasized Japan’s lack of cryptocurrency exchange regulations. Japan regulates such exchange but does not touch the hot wallet systems.

This incident showed that the problem has not been solved at all. If Coincheck screws up its crisis management, that could deal a blow to the current cryptocurrency fever, said Makoto Sakuma, from the NLI Research Institute.

Meanwhile, other specialists explain that hackers can laundry the funds if they convert NEM coins into a another more anonymized currency, such as Monero. This is not the first cryptocurrency theft. Moreover, researchers estimate that over 14% of all Bitcoin and Ether funds are stolen.

But are there solutions to protect crypto-funds is to use hardware wallets. There is also the option to print out private coin keys and keep them on paper.

Image Source: Pixabay.

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