NEMs of 523 million XEM ($ 533 million) were leaked from Japanese crypto-exchange Coincheck. The specifics of the situation and the crime has not been disclosed, but this multiple crypto currency-exchange is being investigated by the Japanese FSA. In Japan, Bitcoin leaked $ 1.6 billion in 2014 and was a major incident as it caused the Mt. Gox company to go bankrupt. There are many outflows of cryptocurrencies, such as the Dao incident where Etherium was hacked on a global scale for over $60 million, which highlighted the issues relating to the cryptocurrency.

XEM: A kind of crypto-currency

NEM: A unit of XEM

B: How did NEM leak out from Coincheck? A: Usually this was managed offline, but due to a lack of employees, the system was left online. Storage Remittance amount Virtual currency deposited from customer The full amount is net connection Encryption key Net connection for remittance Singular Multiple Almost all outflows ($ 533 million) Was the encryption key stolen? The Hacker withdrew illegally

A: It is possible to specify the deposit / withdrawal history of virtual currency using NEM BlockChain Explorer. However, if the owner of Wallet does not use exchanges with identity confirmation it is difficult to identify. Coincheck’s Wallet address The wallet address suspected to be the criminal’s.

A: The Korean intelligence agency suspects that North Korea was involved.

A: The Financial Services Agency of Japan issued the first administrative sanction for the virtual currency exchange trader, and ordered Coincheck to formulate measures to prevent recurrence. In addition, on-site inspections of virtual currency exchanges in Japan have been multiplied. January 26 Incident Discovered January 29 Ordered Business Improvement February 2 On-site inspection by the FSA

A: Even though Coincheck was never licensed from Japanese Financial Services Agency as a virtual currency exchanger, it was practicing as a supplier while applying for authorization.

A: Even while applying for authorization, the law as well as those with licenses for virtual currency exchange business must be adhered. However, monitoring of the internal control by the Japanese Financial Services Agency was too lenient.

A: Coincheck incidents occur due to lack of staff and an inadequate management system. Coincheck announced compensation to the affected NEM holders, approximately 260,000 people. Total amount: 523 million XEM Number of holders: approximately 260,000 Compensation amount: 88.549 yen × number possessed Compensation method: refund to Coincheck wallet in Japanese yen Compensation timing: Under consideration.

A: A legal team has been formed by users and have demanded compensation for opportunity losses due to refunds at NEM as well as limitations on withdrawals and announced a potential class action lawsuit.

A: It is known that Japanese men exchanged the leaked NEM on the dark web in exchange for Litecoins, and may be a clue that helps to identify the criminal.

A: It is said that the technology of the block chain was not broken, but the management operating system was said to be hacked. Security problems on the managerial side of the virtual currency occur frequently. The Mt. Gox Incident The Dao incident The Bitgrail incident

A: The price fluctuation of virtual currencies being volatile have linked with legal tender currencies to become “Tether.”

Wells Fargo seems to have pointed out the possibility that it does not possess the equivalent issue price to the dollar that was assumed. Tether allegations

A: While problems such as fraud and hacking continue one after another, enthusiasm for virtual currency continues to grow. Is the market going to be healthy or misused? The world that can enjoy this futuristic technology safely seems to be long way away.

 

Conclusion

There have been a series of spill cases of cryptocurrencies. According to the report, there were only six observers monitoring Coincheck. The robust security of Blockchain technology and the merit of cryptocurrency operating 24 hours a day, 365 days are good measures to prevent cyber attacks if there is a problem with the management system.
Unlike banks, cryptocurrency exchangers do not disclose deposit balances or account numbers. While the information disclosure to users has not yet been developed, the world’s cryptocurrency market size has surpassed 91 trillion yen (as of January 8, 2018), the rapid increase in users and the size of transactions are rapidly expanding.

 

Every time a cryptocurrency leakage incident has occurred, the price of the cryptocurrency fell, then it bounced back, so no one knows whether the cryptocurrency will collapse in 2018. In a panel discussion opened by the Japan CryptoCurrency Business Operator Association, Coincheck said it had managed the cryptocurrency offline and stated that it explained the adoption of multi-sing which requires multiple electronic signatures in the transaction. While NEM is controlled by neither, the problems of internal control and the execution system of cryptocurrency exchange companies are clearer than the cryptocurrency itself.

Businesses that develop exchanges before the introduction of the registration system of the cryptocurrency exchange in April 2017 are allowed to operate as “deemed traders” by the Financial Services Agency. Despite the regulation of the fund settlement law and supervision similar to registrants, the Financial Services Agency announced that Coincheck had vulnerability on the system and prompted early rectification.
In New York State, France, Germany, Switzerland, cryptocurrency exchangers are licensed. As in the case of Coincheck, 15 companies still continue to operate as deemed dealers in Japan. Is internal control of these suppliers sufficient? The financial situation also remains uncertain to users. Should the exchange also have a deposit insurance system like banks? Let’s be prudent and pay more attention to the challenges Japan faces in driving the cryptocurrency market.

 

Manga Artist: Kotobuki Maeno
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