The Largest Exchange Hack Ever
Updated: Jan 30, 2018
We've said it a number of times. Heck, we've even screamed it from the top of the proverbial mountain. We don't want to say that we told you so.
But, nonetheless, here we go again. Another hack of a cryptocurrency exchange. This one now the largest in history.
Today, Japanese exchange Coincheck indicated that it had lost approximately $533 million (58 billion Yen) worth of NEM's crypto token XEM. Although an investigation continues and no one is completely certain how the hack happened at this time, the fact is that if the users of this exchange had not left their currency in the Coincheck wallets but had instead taken Coins Demystified's advice of transferring to hardware or paper wallets, this hack would have been far less effective. Right now the only fact that is absolutely certain is that the value of the hack exceeds $400 million, which still makes it the largest ever theft from a cryptocurrency exchange. This hack now surpasses the $340 million in Bitcoin stolen from the Mt. Gox exchange back in 2014.
This is not all, however. It was also recently reported that there does not exist a SINGLE SOUTH KOREAN EXCHANGE that has appropriate security protocols in place to protect its users' cryptocurrency investments. These security lapses were revealed as a result of a survey conducted by the South Korean Communications Commission. Exchanges have been given 30 days to remediate the findings and safeguard their systems or face steep fines and other regulatory penalties.
The hack of Coincheck and the lax security findings in South Korean serve to underscore the need to always maintain your own private keys to your own wallet. If your cryptocurrency is on an exchange, it can be stolen by hackers. If it is secured in your own hardware wallet, this is far, far less likely. Please protect yourselves and take appropriate measures to safeguard your investments. All of the instructions on how to properly secure your private keys are provided throughout the coinsdemystified.com web site.
Be safe out there!
UPDATE 1/30/2018: Coincheck executives have confirmed that the company will use its own profits to partially repay investors who lost funds in the hack. A sum of $425 million US dollars will be repaid, or about $0.81 on the dollar. While this company is decidedly doing its best to do the right thing by its client base, it is the belief of this author that more should have been done from the outset including early and often security testing and procuring cyber liability insurance policies to ensure that a hack like this (a) never happened in the first place, or (b) was fully covered by insurance if it did happen. It should further be noted that any insurer willing to provide a cyber liability policy to a cryptocurrency exchange would have had a number of security protocols and procedures which could have mitigated this attack, and Coincheck would have been obligated to follow those protocols and procedures to ensure coverage.