According to major Japanese cryptocurrency exchange CoinCheck executives, more than $530 million worth of NEM has been stolen from the trading platform.
MineCC, a Japan-based cryptocurrency analyst, reported that during an official public conference, CoinCheck executives admitted that all funds stored in its hot wallet were stolen by an unknown group of hackers.
Unlike cold wallets, which are secure and kept offline, hot wallets can be accessed if servers are breached by hackers. As such, the majority of large-scale cryptocurrency exchange in the industry only store a small portion of funds in hot wallets and the rest in cold wallets, securely kept offline and out of reach from hackers.
“It was hard for us to manage cold wallet,” the CoinCheck team said.
While it remains unclear whether other cryptocurrencies were stolen from the exchange, as of now, it has been confirmed by CoinCheck that $530 million worth of NEM has been stolen. NEM developers and the open-source development community have reaffirmed that a hard fork will not be executed to recover lost funds from a centralized cryptocurrency exchange.
Japan is the largest cryptocurrency exchange market globally, with daily trading volumes significantly larger than that of the US and South Korean markets. It also has a strict licensing program for cryptocurrency exchanges, which was created to ensure the quality of security measures and infrastructures employed by trading platforms.
Investors were taken aback by the hacking attack, as CoinCheck is one of the largest cryptocurrency exchanges in the Japanese market behind BitFlyer.
The CoinCheck hacking attack was reported to the Japanese Financial Services Agency (FSA), and various government agencies are expected to be involved in investigating the CoinCheck security breach.
Featured image from Shutterstock.
AUTHOR: Joseph Young