Coincheck to Refund all users involved in $530 million Hack

Japanese-based cryptocurrency exchange Coincheck was targeted in a cyberattack that resulted in a total of 523 million NEM (XEM) coins being stolen last Friday, approximately $534 million at the time of the breach. Coincheck confirmed the hack and said that it will refund all affected users in the breach, which was decided by Coincheck CEO Wada Koichiro.

Prices of XEM crashed nearly 25 percent after the breach from $1.02 to a low of $0.77  was announced, but quickly recovered rebounding even higher to $1.11 by Saturday, according to CoinMarketCap.

The breach affected approximately 260,000 users. Coincheck says users will be repaid in JPY via Coincheck wallet. Users will be repaid 88.549 JPY (0.82 USD) multiplied by the amount of coins held prior to the breach.

Reparations were based off another exchange Zaif’s rates, who has the most trading volume both domestically and internationally in volume. Prices are were also determined by suspension of purchases and sales on Friday and release of Coincheck’s statement regarding refunds.

“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.” said Coincheck in a blog post.

“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.” added Coincheck.

The Japanese Financial Services Agency (FSA) is now moving to take legal actions regarding the breach, as the local police department has already launched a probe into the case. The breach also shocks Japanese government officials after lawmakers had passed a legislation last year in order to prevent attacks such as these.

The FSA is saying that lack of proper security measures allowed hackers to make off with a record haul of cryptocurrency. The FSA is expected to order Coincheck to strengthen its security measures, according to Nikkei Asian Review.

It will not be a surprised if Coincheck is penalized for its security measures even after officials have issued regulatory standards to protect its citizens.

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