Coincheck suspended deposits and withdrawals for all crypto-currencies except Bitcoin as it assessed its losses in NEM, a lesser-known coin.

If the theft is confirmed, it will be the largest involving digital currency.

Another Tokyo exchange, MtGox, collapsed in 2014 after admitting that $400m had been stolen from its network.

The stolen Coincheck money was said to be kept in a “hot wallet” – a part of the exchange connected to the internet. That contrasts with a cold wallet, where funds are stored securely offline.

Coincheck says it has the digital address of where the money was sent and is going to do what it can to compensate investors.

Hackers broke in at 02:57 (17:57 GMT) on Friday, the company said in a statement, but the breach was not discovered until 11:25, nearly eight and a half hours later.

Company chief operating officer Yusuke Otsuka said 523m NEMs had been sent from Coincheck’s NEM address during the breach.

“It’s worth 58bn yen based on the calculation at the rate when detected,” he said at a press conference at the Tokyo Stock Exchange.

Coincheck was still examining how many customers had been affected and trying to establish whether the break-in had been launched from Japan or another country.

“We know where the funds were sent,” Mr Otsuka added. “We are tracing them and if we’re able to continue tracking, it may be possible to recover them. But it is something we are investigating at the moment.”

Coincheck reported the incident to the police and to Japan’s Financial Services Agency.

How damaging is the loss?

NEM, the 10th-largest crypto-currency by market value, fell 11% over a 24-hour period to 87 cents, as of 18:30, Bloomberg news agency reports.

Among the other crypto-currencies, Bitcoin dropped 3.4% and Ripple retreated 9.9% on Friday, according to prices seen by the agency.

More was lost on Friday than in 2014, when MtGox lost what it thought was 850,000 bitcoins. However, MtGox later found 200.000 bitcoins in an old digital wallet.

After the collapse of MtGox shook the digital currency world, a licensing system was introduced in Japan to increase oversight of local currency exchanges such as Coincheck.

“What’s the lasting impact? It’s hard to tell,” Marc Ostwald, global strategist at ADM Investor Services International in London, told Bloomberg.

“Japan is one of the most pro-crypto trading countries, among the G-20. In Japan they don’t really want a wholesale clampdown. So it will be interesting how Japanese regulators respond to this, if they indeed do.”

What is Coincheck?

Founded in 2012, the company is based in Tokyo, where it employed 71 people as of August last year.

Its headquarters are located in the city’s Shibuya district, an area popular with start-ups that was also home to MtGox, Bloomberg reports.

Last year, Coincheck began running adverts on national television featuring popular local comedian Tetsuro Degawa, the agency adds.

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Source: BBC

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The virtual currency reached $3,451.86 (£2,651) per coin in Monday trade, according to the Coindesk Bitcoin Price Index.

It had never crossed the $3,000 mark until the weekend. The market value of all bitcoins in existence has now surpassed $56bn (£43bn).

The surge followed the creation of a spin-off crypto-currency, Bitcoin Cash, last week.

The new asset is trading well below the peak price of $727.54 (£557) per coin it attained on 2 August.

However, Bitcoin Cash’s future does appear to be more assured after Coinbase, one of the leading exchange and wallet services, promised to support it after previously refusing to give such a commitment.

“We are planning to have support for Bitcoin Cash by 1 January 2018, assuming no additional risks emerge during that time,” it announced on its blog.

Bitcoin fork

The value of the original Bitcoin experienced big swings in July. First there was concern that there might be a “civil war” over rival plans to speed up transactions.

That helped cause its value to dip to $1,938.94 (£1,485) on 16 July before a compromise scheme called Segwit2x gained favour.

Then a fresh plan to fork the currency emerged from a group of insiders unhappy with the Segwit2x initiative.

On 1 August, they offered investors a Bitcoin Cash token to match every original Bitcoin token they owned. The move created an incompatible version of the blockchain ledger, which keeps track of past transactions.

The initiative had the potential to undermine the original Bitcoin, particularly if many miners had jumped ship. Miners provide the computer processing power to authorise transactions, and Bitcoin Cash was designed to appeal to their interests.

However, it currently remains more profitable to mine the original Bitcoin’s blockchain than that of Bitcoin Cash, and support for the new crypto-currency remains limited.

“What this has shown is that Bitcoin is much more resilient to forks than some people thought,” commented Michael Parsons, a blockchain adviser.

“And it appears that there is room for more than one type of Bitcoin to exist.”

Another market watcher suggested that the introduction of Bitcoin Cash had actually contributed to the surge in the original version’s value.

“We’ve seen a lot of people selling their Bitcoin Cash in order to buy more Bitcoin,” said Matthew Newton, market analyst at the eToro trading platform.

“On top of this, some investors sat on the sidelines last week, waiting to see what happened, these investors are now moving back into Bitcoin.”

The total market capitalisation for all crypto-currencies – including Ethereum and Litecoin – was close to $118bn on Monday at 14:40 BST, according to CoinMarketCap.

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Source: BBC

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