Coincheck exchange hacked—$530 million stolen

Cryptocurrency has become a hot topic recently with more people and businesses embracing it. Concurrently, more money is being invested in it than ever before. Opportunistic hackers are seizing the moment, attacking often newly-started cryptocurrency exchange webpages and getting away with money that is almost untraceable.

Two attacks stand out: The recent Coincheck exchange hack and the 2014 Mt Gox hack. The initial one resulted in about $530 million lost. Occurring just a few days ago, 26th January 2018, the amount stolen is the biggest in cryptocurrency so far. In early February 2014, the second-largest attack occurred with hackers stealing Bitcoin worth around $460 million from the now defunct exchange Mt Gox. The value of these coins today? $6.6 billion.

In total, at their respective times of attack, almost $1 billion worth of coins were stolen.

 

Coincheck – The newest attack

The Toky-based cryptocurrency exchange Coincheck announced on the 26th of January this year that they had been hacked. The hack resulted in a loss of $530 million worth of NEM coins, a cryptocurrency similar to Bitcoin. Many details remain unclear about the hack except that the stolen coins were stored in a so called “hot wallet”, or online wallet. The opposite would be a “cold wallet”, stored offline.

Coincheck has promised to refund 90% of the losses to investors and have temporarily shut down their services. As a result of the hack, the value of the NEM coins plunged 20% on the market. The attack is currently the biggest recorded theft of cryptocurrency, overtaking the previous largest recorded hack on Japan-based bitcoin exchange Mt Gox in 2014.

 

Mt Gox – Previous record-holder

The previous contender for largest cryptocurrency hack, Japan-based exchange Mt Gox revealed in late February 2014 their systems had been compromised. This was after weeks of “behind the scenes” issues with the webpage. For example, the exchange prevented withdrawals starting early February. A few days later it was revealed by Mt Gox management $460 million worth of Bitcoin had been stolen. Similar to the Coincheck hack, most of the coins came from “hot wallets” stored directly on the exchange.

In contrast with Coincheck, victims of the Mt Gox attack haven’t received any kind of settlement yet as it’s stuck in a legal grey-area. The founder of the page, however, was arrested on suspicion of embezzlement. Another individual was later arrested as well on suspicion of laundering money stolen from the exchange.

 

Similar attacks

All in all, with $1 billion stolen these attacks were massive. However, they aren’t the only ones of their kind. Several other exchanges have been hacked in the last few years with very few arrests having been made. An example is the hack on Bitfinex where $60 million were stolen. This reveals a trend; Attacks on exchanges won’t stop.

Are you or your business considering dealing with cryptocurrencies? Remember that your security needs to be up to par – CYPRO can help! We have the most sophisticated solutions on the market which will save you the hassle of acquiring a dedicated team and expensive resources. Feel free to contact us here.

 

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