Content adapted from this Zerohedge.com article : Source
by Tyler Durden
Following the biggest cybertheft in history - $534 million from Japan's Coincheck - cryptocurrencies are soaring back higher after the exchange confirmed that it will issue full refunds to all of the 260,000 of its users who have become victims of the Friday NEM hack.
As a reminder, the Coincheck exchange was hacked Friday, Jan. 26, resulting in a massive loss of 523 mln NEM coins, worth approximately $534 mln at that time. During a press release following the hack it has been revealed by the exchange's representatives that the funds were stored on a single-signature hot wallet, constituting a relatively low-security environment.
But now, as CoinTelegraph reports,the company has now confirmed its intention to refund the stolen money to the affected users. According to the announcement, the refunds will be done using the exchange's own capital.
The company is still considering the exact timing and methodology for the process. However, it has already announced that** the compensation for each NEM coin will be JPY 88.549, which is the weighted average exchange rate during the period from when the trading was halted to the release of the latest announcement.**
Coincheck indicated that they are referencing the XEM/JPY exchange rate at Zaif, another Japanese exchange which has the most trading volume for XEM globally.
Furthermore, Coincheck has again confirmed their intention to stay in business, as opposed to declaring bankruptcy, saying:
"Along with our ongoing efforts to file applications to be registered as a Cryptocurrency Exchange Service Provider with Financial Services Agency, we will continue business."
NEM soared back to recent highs after the headlines hit...
The crypto community has shown support for Coincheck after this action and the development team behind NEM has announced that it is working on an automated system that will track the stolen coins and tag all addresses that receive the "tainted" money. This will allow any cryptocurrency exchange to blacklist the hackers' accounts, preventing them from ever cashing out their illegally obtained fortune.
The positive sentiment in NEM and the Japanese markets has sparked a rally in the broader crypto markets with Ethereum leading the bounce...
Additionally, this rebound follows a week-long attack from the great-and-good elites in Davos. As CoinTelegraph reports, Full Tilt Capital Partner Anthony Pompliano wasscathing in his analysis of the prevailing sentiment floating around in Davos towards Bitcoin.
The former Facebook product and growth manager suggested that statements made by economist Joseph Stiglitz that Bitcoin was still used for shady purposes actually has the opposite effect of driving people away from cryptocurrency adoption.
Joseph Stiglitz, well-known economist, is bragging to the Davos crowd that Bitcoin is used for "secret use cases" & that fiat currency is superior. My theory is that this type of fear-mongering actually drives more adoption of Bitcoin & cryptocurrencies.
— Pomp 🌪 (@APompliano) January 24, 2018
Max Keiser, host of the Keiser Report on RT, also touched on the wave of negativity around Bitcoin in Davos, but said it was too late for big financial industry players to try to stop what he described as a 'revolution.'
Those at Davos threatened by #Bitcoin maybe could have thwarted the revolution 5 yrs ago. But now it's too late. Go home guys, your time is over.
— Max Keiser (@maxkeiser) January 24, 2018
Renowned American investor Bill Gross suggested that the rise of Bitcoin and cryptocurrency has signaled a move away from centralized institutions governing and controlling money. People seem to be putting their trust in technology over government-run establishments.
Bitcoin's rise may reflect, for better or worse, a monumental transfer of social trust: away from human institutions backed by government and to systems reliant on well-tested computer code.. #WEF18 #Davos pic.twitter.com/Ltuh6owdzm
— Bill Gross (@Bill_Gross) January 23, 2018
Twitter users CryptoWilson highlighted more negative sentiment towards cryptocurrency, sharing a video of French President Emmanuel Macron speaking in favor of regulatory crackdowns by the International Monetary Fund on cryptocurrency.
Macron 'triggered by Bitcoin' at Davos: "I am in favor of the IMF having full competence over the whole areas that escape regulation: bitcoin, cryptocurrencies, shadow banking [...] which can trigger crises."
— Wilson Trodler (@cryptowilson) January 25, 2018
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I covered the WEF event in my blog pretty widely, they did say stuff about bitcoin, but for example Stiglitz has said numerous times before that the same statement. There was nothing new on the negative side for bitcoin in Davos. But almost every leader has acknoledged the fact that blockchain will change lots of industries.
I have also written an article on CoinCheck's refund, you can check it HERE. It is very unexpected event, an exchange to refund it's users - well I guess things are done differently in Japan.
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Japanese are kind people . Humanity should learn from Japanese .This move from coincheck have saved market from going on to prolonged bear period . I hope they tighten their security . Had it been an exchange from other country , we may never see a refund . Mt Gox refunds are still pending ! By refunding , coincheck has set an ideal for other exchanges around the world !
On the other hand it also shows the exchanges aren't secure and can't be trusted . I hope 2018 will be the year for Decentralize exchanges ! People are already migrating to decentralized exchanges .
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Oh man, that line by Macron and the IMF! I could see this coming though. It's clear that when the global economy explodes, and Bitcoin is scapegoated, we will definitely enter a turbulent time for cryptocurrencies.
I wish I shared in Max Keiser's optimism, unfortunately, I don't believe he's accounting for the state of society accurately. Most people are not sufficiently invested in cryptocurrency, and fear losing what little money they have because they are ill-informed and access to reliable authorities in the milieu is lacking.
When Bitcoin goes to 0, as does the global economy in terms of growth, the resulting contraction and social upheaval and turmoil are going to create the perfect conditions for a full-strength crackdown on cryptocurrency.
They'll be "justified" in it, at least from the perspective of a majority of the population, because they will blame the collapse on crypto, and most are not sufficiently financially literate to understand that's a deflection from the real root causes
I hope people interested in cryptocurrency are taking all necessary precautions to create and securing their own niche networks.
Anybody who cares about cryptocurrency should see it as an alternative payment system which they have a responsibility for. Fans of cryptocurrency should have their own mining rigs, mine in decentralized mining pools, and help maintain the integrity of the networks they are involved in.
Otherwise 51% attacks will become the norm and great cryptocurrencies will risk getting taken down by deep-state intelligence agencies who have the computing power to take down an unprotected network...
Seriously, the threat of state-agents infiltrating blockchains and causing mayhem and panic has greatly been overlooked and I think is a pressing concern for any holder of any cryptocurrency...
It's probably better to mine our own cryptocurrency with our own hardware than it is to buy it on an exchange and HODL it.
HODLing does nothing for the security of the network...
Choosing a proof of work and proof of stake coin of preference, and sticking to it, and getting involved with the community, rather than having a large "basket of currencies" seems really important...
They won't be able to take cryptocurrencies offline, but they will be able to criminalize people's activities within them. People will need to learn how to hide their cryptocurrency.
Please be careful everybody! This isn't going to be a smooth transition! There will be blood in the streets as Rockefeller would put it.
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Very excellent theme
I have information on this subject
The Tokyo-based digital currency trading platform "Coincheck" announced a plan to compensate some 260,000 of the $ 523 million NIM currency holders who were illegally withdrawn from the Coincheck platform. The cause of the breach is being investigated, according to a notice on the company's website. Similar events in other currencies, including the Japanese yen, were not confirmed.
On 26 January, the Coincheck platform suspended some of its functions after the event, which occurred at approximately 02:57 on that date. The company disclosed irregularities at around 12:07 pm and issued a notice on a temporary suspension of Nem currency payments. At about 12:38 am, the currency of Nim was suspended temporarily. While at around 16:33, all trades including the Japanese Yen were suspended, followed by a temporary suspension of trading except for the Pitcairn currency including the use of a credit card. In the end, the platform's executives confirmed the theft near the end of the day, and the platform will return the stolen money in the Yen currency to the Coincheck governor.
Thank you for sharing this valuable information.
@zer0hedge
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Yeah
Security failure
During a press conference after the suspension of the activity, the platform executives revealed several details about the penetration and specifically the infrastructure of the platform. "Yuji Nakamura," a technology reporter from Japan, said that the trading platform Coincheck did not implement multi-signature technology, as all the money was stolen in wallets connected to the Internet. In addition, developers of the Coincheck platform are still unsure how to penetrate the platform.
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On the other hand, most major FX platforms such as Kraken, Coinbase and Bitfinex have multiple signature security measures, which in turn prevent money from being processed on public proximal networks until a third party security provider confirms the legitimacy of transactions. Where the lack of a multi-signature service is a critical security flaw to any platform for currency trading. When multi-signature technology is integrated, it will be possible to prevent security breaches.
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This is my view of things...I do not trust the government or the establishments it interacts with.
What I do find puzzling is how an exchange can pay back 1/2 a billion dollars. That is a lot of cheddar to have laying around.
Something smells fishy here.....
Gross does hit upon the point that the existing power structure is under threat. People are going to trust blockchain more than they do the established entities. This will be the case, if for no other reason that they established entities have shown themselves to be crooked (banskters) or incompetent (governments/politicians).
Technology is neutral....it can be used for positive or negative....hopefully, being decentralized, there are enough people in the world who want things to improve and life to be better for all (I believe this is the case). Hence why decentralization will win out in the end.
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I also am wondering how did they manage to find the money. But as I mention it in my Article Japanese have a high moral compass and integrity. The bushido way :)
Coinbase had 1 Billion in revenue this year, I don't think even they have that kind of money. Strange if you ask me.
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Thanks for the great update as always. It's interesting to see how the markets reacted to the recent hack, although if you look at the hack as a percentage fo the market cap it is not as big - I know money is the biggest factor, but it is interesting to note that it was ~1% of the total market value.
I'm glad to see that those who were hacked will be fairly compensated and that Coincheck are staying in business! Thanks again @zer0hedge.
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Hackers, hacking computer encryption systems, 534 million dollars worth of cryptography was transferred to their accounts.
After the pepper attack, Coincheck, the freezer belonged to all the crypto currencies except Bitcoin.
The assets of Coincheck, stolen, are said to be stored offline in a "hot wallet" that is part of the offline stockbroker, not "cold wallet" in a secure way.
While being recorded and transferred to existing ones in the hot wallet, it was saved as an offline server in the cold wallet.
In the case of provenance, he was quoted as the biggest crypto money theft present for him.
A company representative said that it would not be possible to repay the funds lost on friday in a statement made to the Japanese media.
According to Kyodo agency, Coincheck President Koichiro Wada explained that NEM accounts were managed by a system that can be accessed internally in the press statement.
Wada said he was unable to complete the development of technology that allowed the company to manage virtual currencies due to technical difficulties and lack of technicians.
After the robbery incident, the total value of the crypto money exchange declined by about 10 percent, and there was a loss of 6 trillion yen.
The Mt-Gox crypto money market collapsed in Japan with the loss of $ 400 million worth of digital assets in 2014.@zer0hedge
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We are back in business with this increase. Coincheck made a great decision to refund the money of the customers, this was for the good of the crypto market. And I believe they will make massive profits to cover this loss.
The people against bitcoin are too late, they can't stop the currency revolution which has gone deeper into the public.
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I agree with you here. The crypto train left the station in terms of putting it back in the bag. Crypto is going to be too big. Blockchain is going to totally upend the established entities over time. For this reason, millions if not billions will see their lives changed for the better.
It wont be without resistance though. The establishment is going to do whatever they can to stop the spread of this...or at least slow it down.
They will lose in the end but it wont happen overnight.
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He used to intervene
In addition to the non-implementation of multiple signature security measures, the Coincheck platform stores all of its funds in an online wallet rather than offline portfolios. Often, large amounts of money are stored by trading platforms in "cold storage" portfolios, to ensure that even in the event of a breakthrough, hackers can not access user funds. The mismanagement of the Coincheck platform on the storage of funds in the Internet-related portfolio and the failure to implement the multi-signature system ultimately led to the loss of user funds
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I wrote before. The Coincheck event is a game of Japanese currency barons. They cut prices and made purchases. They succeeded in this. I think it's Coincheck at the beginning of this game. After the purchase of the franchise, distribute the money to raise the market value. Why not. For example, make a move. You are making purchases with this move. The price will return to the old days; For example, if you are paying $ 5,000, do not you have $ 2,500 to go hand in hand? Do not you hurt the profits? This is a big game. If you are successful in this vote. Money baron. @zer0hedge
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I believe in crypto but it is obvious that the current USD price is based way too much on Tether bullshit. The coin "market caps" are a ridiculous metric for the value of a crypto because they just represent the average last trading price - and there is no underlying hard asset (property, equipment, intellectual property) as with a company stock. A more accurate fiat valuation could be attained by summing up the value of the order book bid sides across exchanges and maybe guesstimating how much fiat there is ready to buy not on the books. That number is vastly lower than the total market caps. When Tether implodes even though it only has a market cap of like 2.6 billion that is supposed to be a hard cap - when it isn't and everyone cannot "cash out" through Tether there is going to be hell to pay. 50% off.
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Tether has broken off their relationship with their auditor. There is only ONE reason to do this....fraud!
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What I don't understand is why every exchange wouldn't set up their own, legitimate, currency-tied "peg coin" to allow virtual movement in and out of crypto currencies traded on the exchange. The exchange would make money off of each trade in and out, and it would encourage traders to use that exchange as it would offer a "safe harbor" when looking for trades.
Tether is a fantastic idea - the problem is that it is probably a complete and total fraud.
On a side note, does anyone know how the USDT folks rationalize why their "investors" would commit money to backing a coin that, by design, wouldn't offer any return?
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The thing I liked so much was that
The Coincheck platform will calculate the compensation value using the weighted average volume, with reference to the Zaif XEM currency trading platform managed by Tek Bureau. The calculation will be made for the period beginning from the date the currency was introduced at 12:09 am Japan time on 26 January, to launch time at 23:00 Japan time on 27 January. The amount of compensation will be 88,549 Yen for each currency retained. While the podium apologized for any inconvenience caused to business, customers and related parties. It also said it was committed to resuming services, investigating the causes of illegal transfers and strengthening its security system, and would continue its efforts to obtain digital currency registration at the Financial Services Agency. @zer0hedge
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I believe in crypto but it is obvious that the current USD price is based way too much on Tether bullshit. The coin "market caps" are a ridiculous metric for the value of a crypto because they just represent the average last trading price - and there is no underlying hard asset (property, equipment, intellectual property) as with a company stock. A more accurate fiat valuation could be attained by summing up the value of the order book bid sides across exchanges and maybe guesstimating how much fiat there is ready to buy not on the books. That number is vastly lower than the total market caps. When Tether implodes even though it only has a market cap of like 2.6 billion that is supposed to be a hard cap - when it isn't and everyone cannot "cash out" through Tether there is going to be hell to pay. 50% off. @zer0hedge
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Sounds like a conspiracy to me!
Its an inside job man!!! Don't let them keep you down!!
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stolen of money in Japan, the last period popular currencies humidity is stated, the great the robbery then, particularly bitcoin to be a lot of digital currency values of decline in happened.
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nice post my friend
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Great news. I'm especially glad that hackers can not cash out the stolen goods.
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Now thats fun stuff! They have to loose 532million to start making a trace system lol
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Disclaimer: I am just a bot trying to be helpful.
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am just loving the way the market nowadays is immune to socks it seems evestors have gotten used to the shocks already and nothing is new to them anymore #### hodle is the word.
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Great!!! You are awesome @zer0hedge.jpeg)
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Am glad that they will be able to refund all of their users who became victims to the hack.
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"People seem to be putting their trust in technology over government-run establishments."
And with good reason!
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This is the problem i fear the most,having coins on an exchange which is susceptible to hacks ,thats why im looking forward to Decentralised Exchanges such as Kyber Network
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So glad they are back
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