Japanese cryptocurrency exchange to repay users who lost money in $493 million hack Media Man Int

Japanese cryptocurrency exchange to repay users who lost money in $493 million hack -
29th January 2018

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A total of 523 million coins were stolen in the hack. Photo: Bloomberg

Japanese cryptocurrency exchange Coincheck said it will use its own capital to reimburse customers who lost money in Friday's $US400 million ($493 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 yen ($1) 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 in the statement. "The source of the refunded money is being carried out using our own capital."

NEM prices surged 21 per cent to $US1.03 as of 12:31 p.m. Tokyo time, according to prices on coinmarketcap.com. Other cryptocurrencies including Bitcoin, Ether and Litecoin also gained.

Rising scrutiny

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

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 startup has about 80 employees and began cryptocurrency operations in 2014, it said.

Coincheck didn't respond to an email requesting more information and verification of the authenticity of the statement. Multiple phone calls placed to two different numbers went straight to voice mail.

Past deadline

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 penalize 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 Sunday about the circumstances leading to the loss, and the security measures in place.

If Coincheck successfully navigates the theft, the turnaround wouldn't be the first in the cryptocurrency world. Bitcoin exchange Bitfinex also overcame a $US69 million heist and last year repaid most customers who lost money in the August 2016 attack.

(Bloomberg)