Hackers stole a reported $660 million worth of cryptocurrency NEM from Coincheck
Coincheck exchange said on its website it had halted sales and withdrawals of a cryptocurrency called NEM after hackers stole a reported 58 billion yen ($660 million).
What is NEM?
It's a cryptocurrency, just like bitcoin or ethereum.
According to The Verge, it's the eighth largest cryptocurrency in the world by volume.
At the moment, Coincheck says the theft has been limited to NEM, but after announcing the theft it restricted dealings in most other cryptocurrencies too.
How did the hackers pull it off?
Coincheck hasn’t disclosed how their system was breached beyond saying that it wasn’t an inside job. The company did own up to a security lapse that allowed the thief to seize such a large sum: It kept customer assets in what’s known as a hot wallet, which is connected to external networks. Exchanges generally try to keep a majority of customer deposits in cold wallets, which aren’t connected to the outside world and thus are less vulnerable to hacks. Coincheck also lacked multi-signature security, a measure requiring multiple sign-offs before funds can be moved.
The lesson for crypto-enthusiasts is that exchanges are prime targets for hackers and no place to store your coins. One alternative is to keep the assets in software wallets, which come in online, mobile and desktop varieties.
Hardware wallets are dedicated devices that offer an additional layer of security. For the extra paranoid, there is always the analog option: printing out the private keys for your coins on paper.
The Coincheck hack is the latest in a series of attacks targeting digital currency exchanges.
Cybercriminals have been taking advantage of security weaknesses at young, often unregulated businesses that are handling huge sums of other people's money.
"Large scale hacks are among the biggest risks faced today by the global crypto community," said Henri Arslanian, a financial technology expert at consulting firm PwC in Hong Kong.
Mt Gox, also based in Japan, was the world's biggest cryptocurrency exchange when hackers broke in and stole an estimated $400 million worth of bitcoin almost four years ago. Mt Gox went bankrupt shortly afterward and affected users still haven't been compensated.
The meteoric rise in the value of bitcoin and other cryptocurrencies over the past year or so appears to have intensified interest from thieves.
Last month, South Korean bitcoin exchange Youbit filed for bankruptcy after being targeted by cybercriminals twice in the space of a few months.
In a separate incident last month, hackers made off with more than $70 million worth of bitcoin from NiceHash, a digital currency trading platform based in Slovenia.
Many exchanges have grown very quickly as trading has taken off but haven't focused on improving cybersecurity, Arslanian said.
