For many of Japan’s residents, cryptocurrency heists seemed more like something from the past. Over the years, cryptocurrency heists have been plaguing Japan’s exchanges and cryptocurrency holders. Thanks to an increase in government regulation, cryptocurrency exchanges in Japan have been enjoying a spell of stability and security. Coincheck’s hack is once again spelling doom to Japan’s cryptocurrency markets. The Coincheck hack has taken place less than four years since the infamous Mt Gox hack.
The Coincheck hack happening in the backdrop of increased crypto-regulation in Japan
News of Coincheck’s hacking is once again putting Japan in the global spotlight and for all the wrong reasons. The loss of cryptocurrency through hacking of client and exchange wallets earned Japan a bad rep less than half a decade ago. Through the regulations of the country’s crypto market, Japan was able to restore sanity to its digital asset industry, earning the nation praise globally. Only this week, the Bank of Japan slightly endorsed the use of bitcoin.
On Friday, January 26th, more than 127 million Japanese citizens woke to the news of another cryptocurrency heist. Confirmed reports reveal that at around 3 AM local time, a hacker was able to withdraw all the NEM Coincheck was holding. Investigations are underway to determine whether determine the individuals behind Coincheck’s hack.
Security flaw exploited during the Coincheck hack
While the identity of Coincheck’s hacker remains unknown, surfacing information suggests that the hacker was able to take advantage of the flaws present Coincheck’s security protocol. It is public that Coincheck was using a hot wallet that does not have multi-sig to store more than NEM worth more than $500 million.
Similar to the Mt Gox hack, the hacker accessed Coincheck’s NEM using a vulnerability that stems from using wallets that do not have the multi-sig feature. Mt Gox lost more than 850,000 bitcoins in the 2014 hack.