x

Abu Dhabi, UAEWednesday 26 September 2018

Coincheck to repay users who lost money in $400 million hack

Theft of NEM coins impacted 260,000 users

A pedestrian runs past the building where Japan's Coincheck company is located in Tokyo. Christopher Jue / EPA
A pedestrian runs past the building where Japan's Coincheck company is located in Tokyo. Christopher Jue / EPA

Japanese cryptocurrency exchange Coincheck said it will use its own capital to reimburse customers who lost money in Friday’s $400 million theft.

The Tokyo-based company will repay all 260,000 users impacted by the theft of NEM coins, at a rate of ¥88.549 ($0.82) for each coin, according to a statement posted on its website after midnight local time on Sunday. A total of 523 million coins were stolen, it said.

“The timing of the reimbursement and the application process are currently under consideration,” Coincheck said. “The source of the refunded money is being carried out using our own capital."

NEM prices surged 21 per cent to $1.03 as of 12.31pm Tokyo time, according to prices on coinmarketcap. Other cryptocurrencies including bitcoin, ether and litecoin also gained.

The announcement came less than 48 hours after the hack was discovered on Friday. The attack shocked Japanese policymakers, who introduced legislation last April precisely to prevent such disasters, and piled pressure on global crypto markets wary of rising scrutiny from regulators.

_______________

Read more:

Japan's Coincheck loses $400m in crypto coins

Cryptocurrencies slide as Japanese exchange withdrawals halt spook investors

_______________

It was not clear how Coincheck secured the funds necessary to repay customers. Late on Friday, the exchange disclosed that co-founders Koichiro Wada and Yusuke Otsuka owned the majority of shares in the company. Other investors include Tokyo-based venture firm Anri and California-based WiL LLC, according to Otsuka. The start-up has about 80 employees and began cryptocurrency operations in 2014, it said.

Coincheck was four months past its deadline for receiving a license necessary to operate, as part of Japan’s new legislature to vet and audit cryptocurrency exchanges. It was allowed to continue operating while awaiting a decision from the Financial Services Agency.

The agency is getting ready to penalise Coincheck in relation to the hack, the Yomiuri newspaper reported on Sunday without saying where it obtained the information. Media reports also said the FSA will ask company officials about the circumstances leading to the loss, and the security measures in place.

If Coincheck successfully navigates the theft, the turnaround would not be the first in the cryptocurrency world. Bitcoin exchange Bitfinex also overcame a $69m heist and last year repaid most customers who lost money in the August 2016 attack.

RELATED ARTICLES
Recommended