TOKYO • Japanese cryptocurrency exchange Coincheck yesterday said it will use its own capital to reimburse customers who lost money in a US$400 million (S$520 million) theft last Friday.
The Tokyo-based company will repay all 260,000 users hit by the theft of NEM coins, at a rate of 88.549 yen (S$1.07) for each coin, a statement on its website says.
That amounts to nearly 90 per cent of the 58 billion yen worth of NEM coins lost in an attack that on Friday forced the company to suspend withdrawals of all cryptocurrencies except bitcoin.
A total of 523 million coins were stolen, the company said.
"The timing of the reimbursement and the application process are currently under consideration," Coincheck said in the statement. "The source of the refunded money is being carried out using our own capital."
On Friday, the company detected an "unauthorised access" of the exchange, and later suspended trading for all cryptocurrencies apart from bitcoin.
The resulting loss exceeded the value of bitcoins which disappeared from MtGox in 2014. That major Tokyo-based bitcoin exchange collapsed after admitting that 850,000 coins - worth around US$480 million at the time - had disappeared from its vaults.
The latest attack shocked Japanese policymakers, who introduced legislation last April precisely to prevent such disasters, and piled pressure on global cryptocurrency markets wary of rising scrutiny from regulators.
Two sources with direct knowledge of the matter said Japan's Financial Services Agency (FSA) sent a notice to the country's roughly 30 firms that operate virtual currency exchanges to warn of further possible cyber attacks, urging them to step up security.
Media reports also said the FSA was expected to ask Coincheck officials yesterday about the circumstances leading to the loss, and the security measures in place.
The financial watchdog is also considering administrative punishment for Coincheck under the financial settlements law, one of the sources said.
Major Japanese newspapers yesterday labelled the management of virtual currencies at Coincheck as "sloppy" and said the company had "expanded business by putting safety second".
Coincheck told a late-Friday news conference that its NEM coins were stored in a "hot wallet" instead of the more secure"cold wallet", outside the Internet. Asked why, company president Koichiro Wada cited technical difficulties and a shortage of staff capable of dealing with them.
BLOOMBERG, REUTERS, AGENCE FRANCE-PRESSE
