Inside the World’s Biggest Cryptocurrency Hack
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On Friday, a Japan-based cryptocurrency exchange revealed hackers had stolen more than $500 million-worth of customers’ funds in what is thought to be the largest-ever cryptocurrency hack.
Coincheck said in a blog post that the hack "has caused immense distress to our customers, other exchanges, and people throughout the cryptocurrency industry."
"We would like to offer our deepest and humblest apologies to all of those involved," the exchange said. It has currently suspended trading in all virtual currencies apart from bitcoin.
The price of NEM plunged almost 20% after the theft came to light over the weekend, but it has since recovered those losses.
Since XEM revolves around blockchain database technology, the funds can be tracked. And already, Coincheck has found the 11 addresses where all 523 million of the stolen coins ended up. The addresses have been labeled by XEM developers with a tag that reads “coincheck_stolen_funds_do_not_accept_trades : owner_of_this_account_is_hacker.” The developers have also created a tracking tool that allows exchanges to automatically reject those stolen funds.
However, the hackers are still likely to be able to use the funds. Some sites provide a service called a “tumbler” that offers cryptocurrency trading without collecting personal data, the crypto equivalent of laundering money. The huge sum of money stolen is a major challenge. It would take awhile to spend down all the funds and at least one major tumbler serviced has banned usage of the stolen cryptocurrency.
But XEM users look like they dodged a bullet. Coincheck has promised to reimburse nearly 90% of the losses.