NEM responds to $534 million in XEM stolen from Coincheck

One of the largest thefts on a cryptocurrency exchange occurred this weekend involving Japanese exchange Coincheck and the digital asset XEM of blockchain NEM. The NEM Foundation has issued an official response to the incident which can be read below.

Yesterday, $534 million worth of XEM, the native cryptocurrency of NEM, was announced as stolen from Japanese cryptocurrency exchange Coincheck, one of the largest in the country. Here’s the official statement from Foundation Vice President Jeff McDonald with the recent massive hack:

“The NEM Foundation is working on solutions to do the most we can to help CoinCheck and also ensure the NEM community is protected. Due to the nature of NEM’s architecture and its advanced API, we are currently reaching out to exchanges and exploring three different options. Due to the exact nature of these options and the security concerns around them, we have no further comment on how we are actively working to address this situation at this time.”

“We hope everyone can understand that while we believe the community deserves to know everything we are doing, we also believe it is in the community’s best interest to not publicly discuss the full detail our actions considering the security needed around our solution.”

“We also have a full account for all of Coincheck’s lost XEM on the blockchain. At this time, the hacker has not moved any of the funds to any exchange, nor to any personal accounts of NEM community members.”

Stolen funds can be traced on the NEM blockchain

NEM is creating an automated tagging system that will be ready in 24–48 hours. This automated system will follow the money and tag any account that receives tainted money. NEM has already shown exchanges how to check if an account has been tagged. So the good news is that the money that was hacked via exchanges can’t leave.

Coincheck to refund all customers affected by hack

Meanwhile, Coincheck confirmed its intention to refund the stolen money to the affected 260,000 users. According to the announcement, the refunds will be done using the exchange’s own capital. CoinCheck will refind NEM holders in Japanese yen using a weighted average price from the time of NEM’s suspension of trading at Coincheck.

As a measure of further protection, the company also announced that cryptocurrencies BTC / ETH / ETC / LSK / FCT / XMR / REP will no longer be stored in special accounts in a major financial institution. While XRP / ZEC / LTC / DASH / BCH registered to customer accounts have been transferred out of hot wallets and will now be stored in cold wallets.

Lastly, the Coincheck Affiliate Program will be suspended starting today, January 28, 2018. Re-opening is undecided at the moment while the company works through the aftermath of the hack and stolen funds.