One of Japan’s largest cryptocurrency exchanges has halted all withdrawals amidst rumors of a large-scale hack. Ripple worth $123 million was withdrawn from its wallet on Friday January 26 along with a single withdrawal of 500 million NEM, with the altcoin’s foundation president Lon Wong then tweeting “It’s unfortunate that coincheck got hacked. But we are doing everything we can to help.” Upon news of the alleged hack surfacing, the price of NEM dipped sharply, leaving it down 19% in the past 24 hours
As media gather outside Coincheck’s Tokyo HQ, onlookers are trying to work out what’s happened to the exchange. The first signs that something was amiss emerged after $123 million of ripple was withdrawn as well as a transaction of 500 million NEM (XEM) worth around $600 million at the time. Shortly afterwards, the Japanese exchange announced that it had halted all withdrawals. The ripple receiving address already held a large XRP balance, and so the withdrawal may have been Ripple protecting its assets.
It has yet to be confirmed that the exchange has been hacked, despite a tweet from NEM’s president affirming as much. He later added that he didn’t think NEM should hard fork to freeze the stolen funds. In a blogpost today, Coincheck wrote: “Depositing NEM on Coincheck is currently being restricted. Deposits made to your account will not be reflected in your balance, and we advise all users to refrain from making deposits until the restriction has been lifted. We sincerely apologize for the inconvenience this has caused everyone.”
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Coincheck later updated its blog post multiple times to announce firstly that it had halted the purchase and sale of NEM, then withdrawals of NEM, then all cryptocurrency purchases, and finally all payments by credit card and other fiat currencies. If it transpires that the NEM withdrawal was unauthorized, it would mean that around 5% of the total supply has been stolen. As a percentage of total supply – as well as in dollar terms – that would make the hack larger than that which befell Mt Gox in 2014, though the repercussions of today’s events will be more localized.