The site operator, Coincheck, announced the currency called NEM disappeared at around 3 AM Friday. Coincheck suspended all withdrawals, halted trading in all tokens except bitcoin, and stopped deposits into NEM coins.
The theft of the massive number of NEM tokens has affected the cryptocurrency market and NEM's value tumbled 11% over a 24-hour period to 87 cents per token. Coincheck managed its NEM accounts on systems vulnerable to hacking via external networks. While this is the biggest theft in cryptocurrency history, it's certainly not the first and will not likely be the last. "As soon as the cause is known", it continued, "we will take measures to prevent recurrence".
Meanwhile, the SEC this week also said it was "looking closely" at disclosures of public companies that have shifted their focus abruptly to blockchain, the record-keeping technology that underpins Bitcoin transactions. This was followed by a similar suspension of trading for all cryptocurrencies, except bitcoin.
In the annals of cryptocurrency exchange platform hacks, the Coincheck incident is now the biggest hack ever, surpassing the Mt. Gox incident from 2014 when hackers stole over $450 million worth of Bitcoin. They have had to unfortunately suspended withdrawals of nearly all cryptocurrencies.The exchange has already reported the incident to the police and to Japan's Financial Services Agency.
"I would've thought that the whole crypto landscape would've been down quite a bit on this news of a major Japanese exchange getting hacked", said Michael Graham, senior equity analyst at Canaccord Genuity. Coincheck stored other cryptocurrencies in the more secure multisig wallets, however, the NEM tokens were stored in a hot wallet. It operates exchanges between bitcoin/ethereum and fiat currencies in Japan.
Another difference is that the Coincheck customers have some hope of being repaid, whereas most of the bitcoins stolen from Gox were never recovered and its users were not made whole.