Coincheck loses $400M in NEM cryptocurrency to hackers

The cryptocurrency market has just been hit with one of its biggest losses in its short lifespan. The Tokyo-based Coincheck, one of Japan's largest cryptocurrency exchanges, has confirmed that it recently lost 500 million tokens of the NEM currency to attackers, and is still investigating how they got away with it. The theft is said to be worth at least $400 million, although it's difficult to determine the exact value due to the rapidly changing rates of cryptocurrency.

Coincheck states that the attackers breached their network on January 25th, and it was roughly eight hours before the "illicit" transfer was detected. The 500 million NEM tokens were kept in an internet-connected "hot storage," and since then the exchange has put a freeze on almost all trading and withdrawals.

The theft is said to have affected nearly 260,000 users, and Coincheck notes that it will reimburse all those who lost money if needed while it investigates where the funds were transferred. As of this writing NEM is listed as the tenth largest cryptocurrency by volume on CoinMarketCap, behind those like Bitcoin, Ethereum, and Litecoin.

Coincheck's security breach echoes that of Mt. Gox in 2014, where another Japanese exchange lost between $400 and $480 million in Bitcoin. Analysts note that the current incident isn't having the same effect on the digital currency economy, as Mt. Gox was responsible for roughly 80% of Bitcoin trading at the time, and the market has grown significantly in the years since then.

SOURCE Bloomberg