Coincheck Completes Compensation for Stolen NEM Tokens
Coincheck has finished refunding stolen NEM tokens to its customers. The Japanese exchange was recently hacked prompting it to shut down operations. Customers have been unable to make withdrawals after they were frozen. Some had already gone to court to compel the company to release their deposits.
The Tokyo based exchange is reported to have refunded $440 million from its own funds. The development saw the price of NEM (XEM), the native token shoot up 19% on Tuesday defying a general downward trend in the cryptocurrency market. NEM prices rose sharply to $0.45 before retreating to about $0.41 on Thursday.
Each stolen NEM token was calculated at the rate of $0.83 or 88.549 Japanese Yen. The compensation will be made in Japanese Yen. 260,000 customers were affected in the late January hack. 523 million tokens were stolen in the heist then estimated to be worth $523 million.
In a press release posted after the resumption of services, the company said they were reviewing their management and internal control systems to make sure security breaches do not happen again.
“We will solemnly and seriously take the measures we take carefully (sic) and will deeply reflect on ourselves and will drastically review our internal control system and management control system and will review the management strategy that thoroughly protects customers,” the press release read.
A low-security hot wallet was infiltrated in the hack. Suspicious emails were sent to staff in the lead up allowing the system to communicate externally.
Withdrawals for Ethereum, Ripple, Ethereum Classic, Bitcoin, Bitcoin Cash and Litecoin have also resumed.
Previous remittance applications will be canceled.
Trading has also resumed after being halted as the exchange took time to put adequate security measures in place.
The news gave a new lease of life to the digital currency with $140 million being traded in 24 hours.
Coincheck Class Action Suits
Coincheck was staring at the prospect of potentially expensive class action suits brought by its customers seeking refunds. One suit was filed by a group of 132 investors seeking reimbursement of a total of $2.1 million.
The Financial Services Commission has been imposing penalties on a number of exchanges in Japan for various violations. Two exchanges Bit Station and FSHO will remain suspended for a month for failing to put in place security protocols and controls to safeguard customer deposits.
Coincheck was similarly issued with improvement orders.
It is difficult to predict how the exchange might perform after reopening but the strong performance of NEM is a good indicator. However, customers are unable to deposit, a situation that could prove disastrous for the company in the long run.
Japan accounts for 40% of global cryptocurrency trading.
According to the BIG Blockchain Intelligence Group Inc., some of the stolen NEM were traced back to a Canadian exchange and a Japanese exchange named Zaif.
Cryptocurrencies have been reeling amid harsh regulatory scrutiny.
Bitcoin traded below $9000 on Wednesday after news emerged that Google will be suspending cryptocurrency related ads starting June. The move it said is aimed at safeguarding customers from deceptive promotional material.