Saturday, January 27, 2018

CoinCheck cracked

CoinCheck, a famous cryptocurrency exchange, was attacked by an unknown cracker. It got stolen almost the whole stocked XEM. The amount of lost XEM reached 400 million USD. Coincheck Says It Lost Crypto Coins Valued at About $400 Million

The president of CoinCheck accepted an interview at midnight yesterday in Japan. He said someone transferred XEM stored in the exchange all at sudden. When he noticed the abnormal movement, the transaction seemed to have been completed. Therefore he stopped the function of the exchange, to investigate what had happened. It is quite likely a cracker illicitly conducted a transfer via compromising the system.

According to the report, CoinCheck had not adopted the reservation with cold wallets. The multi-signature technology was not working either. Thus, the security level of CoinCheck has not matched the standard. The president denied the issue of inadequate security. But his claim will not be accepted.

Whether the assets of the users will be compensated is uncertain. But it cannot be expectable, I am afraid. CoinCheck will not be able to avoid bankruptcy.

(1/28/2018) CoinCheck announced that it would compensate all of the lost currency with its own stock.

This incident is not due to the problem in XEM itself, or other cryptocurrencies. Instead, the security risk of exchange became apparent again after the case of Mt. Gox happened in 2014. In Japan, there had been rare cracking cases occurred in recent years.

It is not surprising that the price of XEM and other cryptocurrencies is falling. The confusion of the market will be continuous for a while.

Also, this kind of scandals is unavoidable in the process of spreading of newly developed technology. We have to be calm and observe the situation.

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