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Coincheck facing government raid after £380m NEM hot wallet hack

ONE of Japan’s largest crypto exchanges has been warned it could face a raid by Government officials and law enforcement following a massive hack.

Hackers stole the equivalent of £380m of NEM crypto from a ‘hot wallet’ on the exchange Coincheck on Friday, the company has confirmed.

The raid on the virtual asset store targeted around 260,000 customers in the brazen attack which has left the firm in turmoil.

Around 100,000 businesses in Japan use crypto currency for day to day business transactions.

Bitcoin customers continue to transact

Coincheck has been forced to put a temporary freeze on deposits and withdrawals for all cryptocurrencies except Bitcoin after discovering unauthorised access to its accounts.

Now the company is scrambling to trace the origins of the hackers by a February 13 deadline handed down by lawmakers.

Coincheck COO Yusuke Otsuka said 523m NEMs were removed from from Coincheck’s NEM address during the hack.

Coincheck said 523m NEMs were removed from from the company's NEM
Coincheck said 523m NEMs were removed from from the company’s NEM

He told a press conference at the Tokyo Stock Exchange: “It’s worth 58bn yen based on the calculation at the rate when detected.

“We know where the funds were sent.

“We are tracing them and if we’re able to continue tracking, it may be possible to recover them.”

The Japanese Financial Services Agency (FSA) said has ordered Coincheck to investigate the hack demanding the firm do it “properly.”

The hack could undermine support for the currencies which are fast becoming mainstream in Japan.

The FSA has warned the company that it will raid their offices if they don’t respond to clients and review the breach by February 13.

A spokesman said: “While examining the cause of the incident and taking necessary measures, we want the ministries and agencies concerned to urgently study what further measures we’d need.”

Ministers intervene and order Yen repayments

Coincheck crypto raid
Japan’s FSA is threatening to raid the Coincheck offices

Meanwhile Japan’s finance minister Taro Aso told parliament today that the government would take “necessary administrative measures, including an on-site inspection.”

He added that the company: “did not store the important things separately. I think they lacked fundamental knowledge or common sense.”

Taro Aso was close to President Obama
Taro Aso was close to President Obama

According to reports Coincheck was in the process of trying to secure a license to trade from the Japanese FSA after the country passed laws requiring firms to be approved last year.

This followed on from the 2014 collapse of MtGox, another Tokyo exchange, shut up shop after admitting $400m had been stolen from its network.

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