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$550 Million in NEM Stolen From Coincheck Cannot Be Recovered

March 28, 2018

On January 26th, hackers stole 500 million NEM tokens ('XEM'), worth $550 million, from Japanese exchange Coincheck. A Tokyo cybersecurity firm has now determined that nearly all the stolen XEM have been laundered through dark web channels and are unrecoverable.

 

NEM's protocols should allow transactions to be traced in real-time, which should have aided Coincheck and the 100 Tokyo Metropolitan Police Department officers assigned to the case in identifying wallets attached to the heist. But, for some reason, this did not work, and the automated tagging system was disabled last week by the NEM Foundation as it apparently gave up on tracking down the thieves and recovering the stolen XEM. NEM issued this statement:

 

“Beginning March 18, the NEM.io Foundation has disabled the tracking mosaic that was put into place to monitor XEM movements from the Coincheck theft. This effort was effective at reducing the hacker’s ability to liquidate stolen XEM and provided law enforcement with actionable information. We don’t plan to release further details due to the sensitive nature of this investigation.”

 

The stolen XEM have all been transferred out of hacker-owned accounts, thus completing the laundering of funds.

 

Japanese blockchain expert Masanori Kusunoki noted, "It has become evident we cannot block currency laundering just because all transactions are recorded. Exchange operators need to make prior agreements on the handling of stolen virtual coins."

 

Coincheck has initiated its promised reimbursement process last week, paying out $433 million USD to compensate 260,000 customers that stored NEM on the exchange. Reimbursement is in Japanese Yen at a rate of 88.5 yen ($0.83) to one XEM.

 

 

By: BGN Editorial Staff

 

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