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It was, by any reckoning, a huge haul. Between $ 400 million and $ 534 million dollars of NEM stolen, depending on whether you go on its value at the time or once the market had reacted to the news. At a press conference on Friday afternoon, the stunned Coincheck team painted forlorn figures as they came to terms with being on the receiving end of the greatest heist of all time. In the inevitable post-mortem, questions have been raised about the security practices of the Japanese exchange.
Gox II: Goxxed Harder
Japan thought its days of being the focal point for record-breaking cryptocurrency heists were behind it. Less than four years on from the Mt Gox hack, which heralded the end of Japan’s and the world’s largest exchange, the country is back in the spotlight. Over the past few years, Japan has earned praise for its measured approach to cryptocurrencies, having encouraged their use in a regulated environment. Only this week, the Bank of Japan gave crypto a mild endorsement. But on Friday January 26, the nation’s 127 million citizens awoke to the news that another seismic cryptocurrency hack had occurred on home soil. At around 3am local time, someone withdrew all of the NEM held by the exchange in a single transaction.
The identity and origin of the hacker is unknown at this time, but what few details have emerged suggest serious flaws in Coincheck’s security procedures. It appears that the 500 million NEM were stored in a hot wallet with no multi-sig. If so, the exchange has learned nothing from recent history, for it was a similar setup that resulted in Mt Gox losing around 850,000 bitcoins in 2014. At a press conference on Friday, when asked about Coincheck’s security practices, there was an awkward pause before president Wakata Koichi Yoshihiro batted the question away, electing to issue an apology instead.
The Coincheck Hack by Numbers
The magnitude of the Coincheck hack, a haul which exceeds any other, can be seen by comparing it alongside real world record-breakers.
Securitas Depot Robbery, $ 83 million: Disguised in wigs and prosthetics, a gang did over a security depot in Britain in 2006. They would have made off with more, only there was no more space for cash in the lorry. The Securitas robbery was worth one sixth of the NEM hack.
Knightsbridge Security Deposit Robbery, $ 97 million: A safety depot raid in London in 1987 netted a huge load of cash and jewelry but it was still only worth a fifth of the NEM cryptocurrency hack.
Baghdad Bank Heist, $ 282 million: Iraq’s Dar Es Salaam bank was relieved of hundreds of millions of dollars in 2007, with two guards alleged to be the instigators. The bumper robbery was worth around half the NEM stolen from Coincheck.
Mt Gox, $ 450 million: The tranche of bitcoins stolen from the world’s largest cryptocurrency exchange in 2014 was worth around $ 80 million less than the value of NEM that was taken.
An Irredeemable Fortune
In reality, the thief may find themselves struggling to shift their hot property. Within hours of the attack occurring, the NEM team had contacted cryptocurrency exchanges seeking to have the wallet address blacklisted. One thing NEM won’t be doing is emulating Ethereum and hard-forking. If the blockchain were to be rolled back and the stolen coins forked away, it would do Coincheck a favor, but would do little to demonstrate the immutability of blockchain ledgers.
Japan’s Financial Services Authority has confirmed it is “looking into the facts” surrounding the matter. Meanwhile, Coincheck has promised that it is seeking to compensate its customers who had their NEM stolen. Despite its hefty dollar value, the NEM hack is unlikely to put a discernible dent in the cryptocurrency markets. It raises serious questions though about Coincheck’s fitness to operate a cryptocurrency exchange.
The company had previously reported being approved by the Financial Services Agency, but it’s emerged that Coincheck was not registered with the FSA. The only way for Coincheck to pay back its customers may be for it to be allowed to continue trading. Whether regulators will allow the beleaguered exchange to stay in business – and whether customers will trust it again – is another matter entirely.
Do you think Coincheck should keep trading or wind up its operations? Let us know in the comments section below.
Images courtesy of Shutterstock, Twitter, and Coincheck.
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The post Coincheck Faces Pressing Questions in the Wake of the World’s Biggest Hack appeared first on Bitcoin News.
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Intervention by Visa spelled an end to European crypto debit cards for the majority of customers on Thursday. Around a dozen crypto companies were affected by the shutdown, which instantly wiped out their services across Europe. Issuers such as Bitwala, Tenx, Bitpay, and Xapo were left high and dry after a Visa subsidiary stopped processing payments. Two of the companies affected have since spoken to news.Bitcoin.com, revealing their plans to find an alternative solution.
Crypto Card Holders Are Locked Out
On Thursday, news.Bitcoin.com reported on a sudden crackdown on crypto cards within Europe, orchestrated by Visa subsidiary Wavecrest. The report explained how “the prepaid cards, which have become extremely popular in the crypto community, provide a means of indirectly paying for goods and services using cryptocurrency.”
Bridging the gap between fiat and crypto is one of the biggest challenges cryptocurrency platforms face. Hybrid cards, which allow a debit card to be funded with crypto and then used to make purchases in the local fiat currency, were seen as a smart solution. That all changed this week when hundreds of thousands of European crypto-holders found their cards had been rendered useless.
Tenx was one of those companies affected by the ban. The company’s co-founder, Dr. Julian Hosp, told news.Bitcoin.com that around 200,000 customers had been impacted, but signaled that a resolution is on the horizon:
Tenx was prepared for this, as the company has recently entered partnership with a new card issuing partner and is in the process of getting the new cards live to replace the old ones as soon as possible. Meanwhile, Tenx customers will be able to withdraw their funds from their accounts as of Monday evening (January 8), while they await developments.
Dr Hosp also appeared on a live Hangout on Saturday to explain more about the current situation. The company’s co-founder seems upbeat, telling news.Bitcoin.com of plans to introduce a “live virtual currencies card” and obtain a banking licence for better fiat currency integration.
The Hunt for a New Issuer
Wirex is another crypto card firm that finds itself without a payment processing partner after Visa slammed the door. The company claims to be Wavecrest’s largest client, with over one million customers – most of whom don’t use crypto cards, it should be noted. Nevertheless, the effects of the Visa veto were still dramatic: around 600,000 Wirex plastic or virtual card holders were left without service after the ban.
Interestingly, Wirex CEO Pavel Matveev asserts that Visa are blameless in this, insisting that the blame lies solely with Wavecrest. He told news.Bitcoin.com: “Wavecrest have been violating Visa rules for months…it’s 100% Wavecrest’s fault and they knew it was coming a couple of months ago.”
Like Tenx, Wirex is confident the situation won’t leave its European customers serviceless. Pavel says they have four alternative issuers to choose from, one of which is based in Europe. “For us,” he said, “it’s a question of switching issuer and re-issuing cards, so it’s just a temporary problem; but for a lot of companies it’s the end of their business – they don’t have an alternative issuer and finding one plus integration might take anyway from 6 to 18 months”.
Who’s to Blame?
Some in the cryptocurrency community were swift to point the finger at Visa in the aftermath of the ban, though there is no evidence as yet that the order came from up high. Given that it processes more than 100 billion transactions a year versus bitcoin’s circa 130 million, it’s premature to assert that Visa is feeling threatened by cryptocurrency. Whatever bitcoin is, be it a store of value or a medium of exchange, it is not, as yet, a Visa killer. Nor is Visa, or its subsidiary Wavecrest, a crypto killer.
It seems likely that the majority of European card issuers will be able to resume service in the near future. Customers will be wary, though, of putting all their faith in one crypto card, in the knowledge that a repeat of the Wavecrest incident could see service suspended at any time.
Do you think Visa are culpable, or was this matter none of their doing? Let us know in the comments section below.
Images courtesy of Shutterstock.
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The post Crypto Card Issuers Seek Solutions in the Wake of a European Ban appeared first on Bitcoin News.
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