Hacked Japanese exchange Coincheck to repay depositors $425 million

Hacked Japanese exchange Coincheck to repay depositors $425 million

Should this proceed smoothly, it would be the most graceful handling of a crypto-heist to date.

Friday last week, Japanese cryptocurrency exchange Coincheck suffered the biggest theft in world history after hackers stole around 523 million NEM tokens (XEM) from its hot wallet, effectively dethroning the infamous Mt Gox hack.

Yesterday, the exchange has issued a statement saying “all affected users will be repaid in JPY via Coincheck Wallet” using their company funds.  The reparations policy indicates that 260,000 users will be repaid based on NEM trading value pulled from cryptocurrency exchange Zaif—at 88.549 JPY per NEM. On top of investigating the heist, the company still has to determine how to roll out the repayment, and for how long.

“We realize that this illicit transfer of funds from our platform and the resulting suspension in services has caused immense distress to our customers, other exchanges, and people throughout the cryptocurrency industry, and we would like to offer our deepest and humblest apologies to all of those involved. In moving towards reopening our services, we are putting all of our efforts towards discovering the cause of the illicit transfer and overhauling and strengthening our security measures while simultaneously continuing in our efforts to register with the Financial Services Agency as a Virtual Currency Exchange Service Provider.”

Meanwhile, the Japanese Federal Services Agency (FSA) has ordered Coincheck to improve its practices based on the Payment Services Act, they posted in another release today. The order, which Coincheck “earnestly accepts,” requires that the company submit a report by February 13 containing details on the investigation of the incident, support of its customers, and stronger mitigation and prevention measures.

In a Tweet, NEM President Lon Wong extended his support to Coincheck, saying they are doing everything they can to help. He clarified, however, that NEM will not be forking.

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