Blockchain

$400 Million Of NEM Coins Vanish From Coincheck

NEM

Four years after the collapse of Mt. Gox, Coincheck, one of Japan’s largest cryptocurrency exchanges, has said that about $400 million worth of NEM coins have gone missing, Bloomberg reported.

Coincheck Inc. said that 500 million NEM tokens were sent “illicitly” out of the exchange. As a result, the exchange is halting withdrawals, non-bitcoin trades and deposits into NEM coins.

The news of the missing tokens sent NEM stock down 7.5 percent to $0.86 in the 24 hours through 11:28 A.M. New York time, according to Coinmarketcap.com. During the same period, bitcoin dipped by 1 percent, and Ripple slid 5 percent.

“Investors and traders are very sensitive to any news involving the big exchanges,” Peter Sin, a trader and co-head of the digital currency subcommittee at ACCESS, told CNBC. “This will accelerate price declines.”

Coincheck’s announcement brings back memories of Mt. Gox, the now-defunct bitcoin exchange that shuttered in Feb. 2014 after a mysterious “glitch” caused $500 million worth of bitcoin to go missing. Those bitcoin — or at least most of them — have remained missing ever since. As for the exchange itself, it eventually went bankrupt.

The failed bitcoin exchange, which was the biggest in the world, is now caught up in what Reuters called a “Russian doll” of global bankruptcies, angry creditors and lawsuits. The $1.6 billion of recovered bitcoin by Mt. Gox in the aftermath of the breach — under Japanese exchange law — will only go back to customers in a fractional amount.

“It’s a legal twilight zone. I wouldn’t be surprised if it took several years more,” noted Kim Nilsson, a Swedish software developer, who had more than a dozen bitcoins at Mt. Gox.

That experience is a function of structure: Exchanges like Mt. Gox are mostly unregulated and thus a popular target for enterprising cybercriminals who find them much more attractive for their million- and billion-dollar heists than banks.

All in, between 2011 and November 2017, more than 980,000 bitcoins have been hacked out of exchanges — two-thirds of which came out of Mt. Gox alone.

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