CoinCheck, a Tokyo-based cryptocurrency exchange, today announced its intention to pay compensation in the amount of $523 million that was illegally withdrawn from its holders' accounts. The amount will be returned in Japanese yen.
According to information on the company's official website, the cause of the hack is still under investigation.
On January 26, the service suspended some of its functions after a failure. At noon, a message was published about the temporary suspension of NEM payments. After confusion that lasted all day, the theft was eventually discovered.
Coincheck publicly apologized for any inconvenience experienced by business partners, customers and all parties affected by the incident.
Coincheck stated that it will definitely resume operations, investigate the reasons for the theft and firmly strengthen its security system.
The exchange suspended operations and held a press conference at which its representatives announced the possible reasons for the hacker attack. Some of them, by the way, are due to shortcomings in the service infrastructure.
Press representative Yuji Nakamura noted that Coincheck has not launched the implementation of a smart contract with a multi-signature function. Which, in turn, could have caused the system to be hacked. Coincheck developers still do not know how the hack occurred and how the funds were withdrawn.
Large crypto exchanges such as Kraken, Coinbase and Bitfinex have multi-layered security measures that do not allow funds to be processed on blockchain networks until the security system confirms the legitimacy of transactions.
A critical drawback of any large cryptocurrency exchange is the lack of a multi-signature service. If Coincheck had entered it into the system, the hack most likely would not have occurred.
Moreover, the situation is aggravated by the fact that Coincheck kept all the currency in a hot wallet.
As we know, a cryptocurrency hot wallet works over the Internet, and a cold wallet works offline. Large currency amounts of exchanges are always stored in a cold wallet. Because in this way, even during a hack, hackers will not be able to gain access to users’ capital.
According to https://www.ccn.com
You May Also Like
New Bitfinex Toolkit Will Improve Crypto Trading
Last week, the Bitfinex crypto exchange introduced users to the Honey Framework, a set of tools for programmable trading on its platform. Now users have the second element of the Honey Framework, its strategic part, to create their own trading strategies.
Law enforcement officials identified Bitfinex hackers in 2016
The Department of Justice (DoJ) has seized a record $3.6 billion in Bitcoin that was stolen in the Bitfinex hack in 2016.
