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On Friday, one of the largest cryptocurrency exchanges in Japan was hacked and had around 500 million dollars’ worth of NEM coins stolen. Now, Coincheck Inc. has assured the 260,000 customers affected by the theft that it will refund them using its own money.
Based on total coin market cap, NEM is the tenth largest cryptocurrency right now. A total of 523 million coins were taken during the attack, but Coincheck is reimbursing owners who lost their digital assets, at a rate of 88.549 yen (82 cents) per coin. This is the average exchange rate for NEM during the period from when trading stopped to the release of the latest announcement.
“The timing of the reimbursement and the application process are currently under consideration,” Coincheck said in the statement, which arrived less than 48 hours after the hack. “The source of the refunded money is being carried out using our own capital."
Deposits and withdrawals for all cryptocurrencies other than bitcoin were suspended following the transfer of the coins to the hacker's address. Coinbase said it is still unaware how the incident took place, but we know the tokens were kept in an internet-connect “hot wallet” exchange, rather than being secured offline.
"We know where the funds were sent. We are tracing them and if we're able to continue tracking, it may be possible to recover them," said chief operating officer Yusuke Otsuka
The company said the amount it is paying back covers almost 90 percent of the stolen NEM coins’ worth, though no date has been set for when customers will receive their refunds. Coincheck is set to resume normal service and will continue its investigation to discover how the hack took place and patch the vulnerabilities that made it possible.
The theft is reportedly the largest in cryptocurrency history, beating the Mt. Gox incident that resulted in the loss of 850,000 bitcoins—200,000 of which have since been recovered—worth around $460 million at the time.