This could potentially be the largest crypto heist of all time. 260,000 users of Coincheck have been affected on January 26, 2018. Just who is Coincheck? “the leading bitcoin and cryptocurrency exchange in Asia.” Head quartered in Japan. While Japan has instituted licensing requirements for the industry, these guys where permitted to continue to operate while their license was processed.
Keep in mind the reigning champion was the $400 Million dollar theft of Mt Gox in 2014 that bankrupted the company. For Coinchecks part they have stated that customers will be reimbursed. That is nice talk but how do they plan to do that? There has been no specifics given. One theory is that the company will allocate 10% of revenue towards refunds until everyone is made whole again. The problem is that is going to take a long time.
The problem is complete negligence on Coincheck’s part. They admitted that the the stolen currency was on hot storage. This means it was left online and not protected. Other wallet operators keep coins in cold storage meaning they are not connected to the internet or on actively running devices. The excuse given is that the company did not have the staff to make these transfers to cold storage. In other words they where not investing enough money to keep clients safe. How they stay in business is tough to imagine. The prediction is that customers will flock to alternative providers. They stated they will refund 80% of the lost $530 million out of their own company reserves. No one has verified that the company has this much revenue. The question remains if they have generated this level of profit. How much would have it cost them to put in basic security measures like storing client deposits offline in cold storage?
The theft was of NEM currency. A lesser known crypto which raising the question as to why this currency was targeted and not bitcoin.