On Jan. 26, 2018, Tokyo-based cryptocurrency exchange Coincheck was hit by a hack that resulted in the loss of $530 million. The currency that was being sold is called NEM. Other cryptocurrencies were stopped from being sold as well. Coincheck calls itself the premier Bitcoin and cryptocurrency exchange in Asia. The security slip-up was detected on Friday at approximately 3 a.m. Previously, the largest cyberheist was of Mt. Gox, another Japanese Bitcoin exchange, which lost $440 million in 2014. Japan is seeking to stimulate economic growth, but the increasing difficulty with which companies struggle to secure an asset that only exists online demonstrates the risks that come along with cryptocurrencies. Coincheck was ordered to improve operations by storing coins in a “cold wallet” instead of a “hot wallet,” which utilizes platforms directly connected to the internet. It said on Sunday that it would try to repay 90 percent of the total value of the stolen resources.
Currently, Japanese authorities are investigating all cryptocurrency exchanges for any lapses in security. Japan made global news for being the first country to regulate exchanges at the national level, rather than seeking to discourage exchanges, as is the practice in South Korea and China. The company behind the creation of the NEM coin reported that it was able to track all of the lost coins, but it has no mechanism in place to recover them for their owners. Global leaders at the Davos World Economic Forum issued new warnings about the dangers of cryptocurrencies, and some expressed concern that they could be used for illegal activities. Japan’s top financial official said that regulation of cryptocurrencies would most likely be on the agenda at the G20 finance chiefs’ meeting in Argentina in March later this year. For now, the short-term impact of the hack was a drop in the price of cryptocurrencies, though they later rallied slightly.