With the sudden rise in Crypto Currencies by the public, so has a rise been in Crypto thefts too. A couple of weeks earlier, Lumen Stellar Coins’ scam took place. Now there has been another theft, this time, Coincheck was the victim.
It isn’t just an ordinary theft, but rather easily one of “The Biggest Theft in the History of the World”. Yes, you read that right, Coincheck was hacked leading to a theft of around 520 Million NEM which when converted to USD amounts to a whopping $400 Million as per reported by Lon Wong, President of the NEM.io Foundation to Cryptonews.com.
Coincheck is a platform for cryptocurrency exchange based in Japanese. The theft which took place yesterday morning has been a subject of much criticism, especially on Coincheck. The vulnerability isn’t with the NEM currency, it was with the currency exchange.
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According to Wong, “As far as NEM is concerned, tech is intact. We are not forking. Also, we would advise all exchanges to make use of our multi-signature smart contract which is among the best in the landscape. Coincheck didn’t use them and that’s why they could have been hacked. They were very relaxed with their security measures.” He further stated that. “This is the biggest theft in the history of the world.”
Whoever stole the coins, he just used one account, therefore it’s possible to trace him down, though difficult at the same time. Wong has shown the commitment to doing so, to make up for those who have lost a huge amount of money.
After the news release of this theft, the Coincheck which is one of the biggest cryptocurrency exchanges has stopped it’s business altogether except Bitcoin trading. Not only is it not selling any other cryptocurrency, but also not accepting any purchases. An update based on the site’s official blog at 6:19 pm (JST), 1/26 1 says that:
Currently, credit card, Pay Easy, and convenience store payments are suspended. We sincerely apologize for these inconveniences and will continue to do our best to be back to normal operations as soon as possible.
The immediate effect of this theft has also affected the NEM price as well. Now, there has been an 18.46% reduction in NEM coin price, and all this in just under 24 hours. Not only this, but it’s really hard to predict the fluctuations as well, because of the gruesome situation currently. This is more than 18.5 times more reduction that the small reduction in price by 1 percent in the coin price from January 18th to January 25th. The lowest dropping point was at USD 0.77, but eventually, it did recover and is now at 0.78, though a quite less recovery. The price of this coin the past week was more than one US dollar, i.e. 1.05, therefore it’s a much larger drop in price.
If you are thinking as to why the sudden price drop, the answer is pretty simple. Whenever the risk increases, it’s followed by a panic selling. The risk came in the form of theft which is to be blamed entirely on Coincheck, since they didn’t employ their multi-signature smart contract.
A similar hack was that of Mt Gox, but this one even exceeds by USD 50 million. According to Yahoo Japan,”Even if this is [a case similar to MtGox], the exchange needs to return investor’s funds as much as possible.” It further reported, “If we assume that this business management sloppiness was in order to expand profit, not only management but also shareholders shall be held responsible.”
Now, Coincheck headquarters is surely garnering media attention, as everyone wants to know the complete story behind this.