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A late climax to the Coincheck saga; NEM [XEM]’s Head of South-East Asia provides insight




A late climax to the Coincheck saga; NEM [XEM]'s Head of South-East Asia provides insight
Source: Unsplash

The NEM [XEM]’s Head of South-East Asia, Stephen Chia, during an interview, spoke about the NEM Coincheck hack.

Chia spoke regarding the security measures of Coincheck and said that the exchange platform did not have the required security measures and that was the reason the hack took place. He added that when the hack occurred, everyone in the community knew about NEM since the coin was popular in the eastern countries like Japan and South Korea.

Stephen Chia said that they tried to help the exchange platform because NEM had the mechanism to track the wallets which had the stolen funds. They had tracked the stolen funds for a couple of months and were able to do this because of the volunteers of the NEM community.

He said:

“They [volunteers] did that very well and we saw exactly where the funds were being sent also. So in this case, the owners or the responsibility rests with all the exchanges around the world once they receive the stolen funds.”

He further stated that they had handed over the responsibility to the authorities like the people in the Interpol and had assisted them with the tracking. At that point, the funds were still circulating within the exchange platforms but after a few months, they had to stop the tracking. The reason for this was that the hackers had started sending some of the stolen funds to ‘innocent wallets’ and they were getting tracked.

Chia explained:

“We [NEM] created an embarrassing situation for the exchange and for wallet holders. We decided to actually power down their tracking for the Coincheck hack and basically the responsibility was back to Coincheck to actually do the follow up and work with the authorities because after all, the stolen funds were held by them in the exchange”

The 6% NEM of the total circulation was stolen. The coins are still in circulation and are still a part of the 9 billion that are still in circulation in the ecosystem on the NEM blockchain.

In the month of January 2018, Coincheck, one of the leading cryptocurrency exchanges was compromised due to a hack. The hack stirred up the whole cryptocurrency space as it was recorded as the biggest hack since Mt. Gox. The hackers had stolen almost $500 million worth of NEM.

According to reports, the coins were stolen from hot wallets which were connected to external networks whereas a majority of the cryptocurrency exchange platforms store most of their customers’ funds in cold wallets and are not connected to external platforms. Moreover, Coincheck did not belong to the cryptocurrency exchange platforms which was licensed by Japan’s Financial Services Authority [JFSA].

Following which, the exchange platform announced that they would refund all the customers who were affected by the hack. They agreed to distribute $440 million to almost 260,000 users. Moreover, reports emerged that the coins were converted on the darknet and more than half the coins were either encashed or converted to other cryptocurrencies.

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Priya is a full-time member of the reporting team at AMBCrypto. She is a finance major with one year of writing experience. She has not held any value in Bitcoin or other currencies.