Japanese Officials Raid Cryptocurrency Exchange Coincheck After $500M Theft

Over the last week, one of the biggest thefts in the crypto market came to surface as Japan’s Tokyo-based exchange Coincheck reported having lost $500 million worth NEM tokens overnight. No doubt, the exchange was quick to take action by suspending all trading activities as soon as things arrived at their notice, but what is more surprising is that it was just in the last year 2017 the exchange was granted an official license by the Japanese authorities to carry out crypto-trading operations in the country.

The theft has left the global cryptocurrency market in a big shock and the markets have yet to recover from it. One reason that this news holds a huge impact globally is that Japan is considered as the most crypto-friendly nation on the planet thereby contributing the largest crypto-trading volumes.

In a fresh set of developments, just a week after the hack, Japanese authorities have raided the virtual currency exchange today i.e. Friday, Feb 2. The search has been made by Japan’s financial watchdog – Financial Sevice Agency (FSA) – while checking out some crucial documents and computer data.

As reported by Bloomberg around 10 FSA performed the investigation on Coincheck’s premises in order to get a better understanding of its operations. Earlier this week, the FSA had slammed the exchange for sloppy security and management services. The exchange has been given a time till Feb 13 to submit a report on the security loopholes which could have probably allowed the theft to occur. In addition to this, the exchange has been asked to take necessary preventive measures and strengthen its risk management. Finance Minister, Taro Aso said, “We have launched an on-site inspection to ensure the preservation of clients’ assets.”

However, Coincheck has assured its users that all its 26000 customers who have been affected by the theft will receive the funds at a rate of 88.549 yen per XEM token. Moreover, this refund will also be given from the exchange’s own funds and in fiat-currency yen and not XEM tokens.

Also, two days back, in further investigation of the theft, Reuters reported that hackers have been found moving the stolen XEM tokens (created by NEM foundation). The NEM foundation reported that the stolen coins have been moved to an unidentified account. The NEM foundation VP Jeff McDonald said that the owner of the unidentified account was trying to move the stoled XEM coins to other exchanges from it could have been sold.

However, the location of the hacker could not be traced but McDonald told that “[The hackers are] trying to spend them on multiple exchanges. We are contacting those exchanges.” NEM Foundation spokeswoman Alexandra Tinsman further clarified that the hacker started sending the stolen XEM coins in batches of 100 coins, each worth $83 to random accounts.

McDonald said that it was very much unlikely that the hackers will try to spend all of the stolen cryptocurrency as the “market simply couldn’t absorb that much”. McDonald thinks that the hackers will most likely convert the XEM tokens into other cryptocurrencies before redeeming them and this will make it nearly impossible to trace them. “I would assume that they are going to get away with some of the money,” he said.

The crypto markets are bleeding deep red for the time being and it seems that there is no stop at all to the falling markets. In just the past 24 hours, the market valuations have eroded by more than $125 billion as per the data on CoinMarketCap. Almost all cryptocurrencies are seen correcting by over 20% and this looks to be no less than a market crash. Bitcoin has moved below $8000, Etheruem below $800, Ripple below $0.75 and other altcoins showing a similar correction.

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