What is believed to be the biggest cryptocurrency marketplace hack ever has just occurred in Japan, where digital thieves made off with over half a billion dollars worth of NEM (XEM) tokens, CoinDesk reports.
It’s difficult to pin an exact dollar figure on the theft, since the value fluctuates. What we know is hackers stole 500 million NEM tokens from Coincheck’s digital wallets. The exchange’s president Wakata Yoshihiro and chief operating officer Yusuke Otsuka estimated the loss at 58 billion yen, or around $533 million. Other estimates peg the loss a bit lower at around $420 million, and some have it as high as $600 million.
Official: 58 billion Japanese yen or $530 million worth of NEM was stolen from CoinCheck. Credit to @ETHxCC for reporting first. According to MineCC, CoinCheck used hot wallets not cold wallets, which are not secure.
Press conference by CoinCheck.https://t.co/h3IdFJ6ZcD
— Joseph Young (@iamjosephyoung) January 26, 2018
Regardless of the official tally, it’s a major theft, surpassing the ~$340 million that was famously stolen from Mt. Gox in 2014. However, the impact on the cryptocurrency market at large probably won’t be as big, given that the overall market cap is much bigger now than it was over three years ago.
Following the breach, Coincheck put a halt on NEM trading, followed by a restriction on purchases and sales of all digital currencies, save for Bitcoin. It has also suspended credit card, Pay Easy, and convenience store payments while it sorts through the situation.
NEM, or New Economy Movement, launched on March 31, 2015 with the currency symbol XEM. Unlike Bitcoin, NEM is not mineable—all of the XEM was created at the start and distributed to investors. You can read more about it here. Compared to other cryptocurrencies, NEM is the 10th-largest by market value, according to Coinmarketcap.com.
“Caveat emptor,” said Yvonne Zhang, who had spoken on a panel on the future of cryptocurrencies at an Association of Futures Markets conference in Bangkok on Friday, according to Bloomberg. “The ‘investors’ that did not do due diligence and take time to understand what they’re trading in, both venue and subject matter, face unhedgable risks. If they continue to ‘trade’ the same way knowing the murky nature of this market, they’re gambling.”
The record-setting hack underscores one of the major risks associated with cryptocurrency. While this is the biggest theft in cryptocurrency history, it’s certainly not the first and will not likely be the last.