Japanese exchange Coincheck states they will pay back $400+ million NEM stolen

BN XE929 3nThA 16H 20180127214212 1
BN XE929 3nThA 16H 20180127214212 1

Coincheck Inc. President Koichiro Wada spoke at a press conference Friday in Tokyo. On Sunday, the company said customers holding the cryptocurrency NEM would be paid back following a cyberattack in which some $530 million of the cryptocurrency was lost.PHOTO: TAKUYA INABA/ASSOCIATED PRESS


TOKYO—Japanese exchange Coincheck Inc. said Sunday it would spend up to ¥46.3 billion ($426 million) to pay back customers after it was hacked and lost cryptocurrency worth some $530 million two days earlier.

In a release on its website, Coincheck said customers holding the cryptocurrency NEM would be paid back in Japanese yen at a rate of 88.549 yen per NEM. The company said it lost 523 million NEM after the cyberattack, meaning the payments would amount to ¥46.3 billion. It said about 260,000 customers hold NEM.

Coincheck didn’t say when customers would get the yen. It said it would use its own funds for the payments, but didn’t say whether it had that much yen cash on hand.

The rate being used by Coincheck reflects the fall in NEM’s price in yen after Coincheck’s problems became known on Friday. Some Twitter users criticized Coincheck’s rate, saying it should compensate customers at the earlier, higher rate or pay them back in NEM rather than in yen.

Coincheck has described itself as Japan’s largest bitcoin exchange based on trading volume. On Friday, it halted withdrawals of all cryptocurrencies and yen after the hack. The losses in the apparent heist, if confirmed, would likely go down as the largest in the nine-year history of bitcoin and digital currencies.

On Sunday, Coincheck said it was working to restore service and still wanted to get a license from Japanese authorities to operate as a cryptocurrency exchange. Japan started requiring bitcoin exchanges to be licensed last year, but some exchanges such as Coincheck that were already operating and had applied for a license were allowed to stay in business.

Japan’s other major case of cryptocurrency losses took place nearly four years ago at Mt. Gox, then the world’s largest bitcoin exchange. The exchange operator tried to stay in business after initially discovering the losses, which amounted to about $450 million based on bitcoin’s price at the time, but it ended up in bankruptcy court liquidation. The court process is continuing and Mt. Gox customers are still awaiting compensation.

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