Coincheck Hack: The Best Thing that has Happened to XEM Traders
There might be a silver lining looming for victims of the Japanese Coincheck heist. For many, getting robbed might ultimately prove to be a blessing in disguise.
Regulators Clamp Down After Losses
Around 260,000 traders who lost money due to the theft will be reimbursed at a rate of approximately ¥88 ($0.84) for each of the XEM coins stolen from affected accounts. Luckily for those who lost currency, values have shifted, meaning they’ll come out around $262 million ahead.
Because of a drop in the value of the lost digital currency, which has offset losses, the reimbursement by Coincheck means that the original victims will, in fact, come out in a better financial position than where they would have been had their currency remained in the exchange.
In one of the biggest heists in virtual currency history, around 500 million of the XEM coins were stolen from users of the exchange. Although little-known globally, the coin is a domestic favorite.
Following the attack, Japanese regulators cracked down on Coincheck Inc. and additionally halted trading on other exchanges. The heist has highlighted the reality of a tardy and conflicted approach from local lawmakers in response to the rise of digital coins’ popularity over the last year or two.
Japan’s Financial Services Agency (FSA) announced that it intended to intensify its licensing requirements as well as ongoing scrutiny of cryptocurrency exchanges. Consequently, it has since issued a no-nonsense demand to Coincheck to tighten security measures before reissuing a license will be possible. The FSA would also be conducting on-site inspections to ensure compliance on exchange floors.
Under new, enhanced legislation, exchanges are required to register and comply with FSA guidelines going forward, of which around half of the existing 32 local exchanges have registered so far.
Presently, the FSA is about to conclude its investigations into Coincheck, and there is trepidation among fraternity players that mooted punitive measures will target and even shut certain exchanges.
Fuel to Global Regulators’ Fire
While the new Japanese legislation essentially acknowledges bitcoin as a payment method and acceptable currency – good news for enthusiasts – the downside is that digital coin trading may become more onerous for the citizenry.
Moreover, global regulators will have noted the leaks in the Japanese exchange and be hoping to prevent similar occurrences in their home countries, most likely through far stricter controls. Coincheck Inc.’s operations are still suspended, yet the company is hoping to reopen sometime next week, mid-March, as the FSA issued a “business improvement order” on March 8, 2018.
Despite the exact details of how the theft occurred remaining vague at this stage, company executives have suggested that an employee’s computer might have been hacked with malware, granting the thieves access to the exchange.
Although the stolen coins are visible, there are moves underway to both label them as fraudulent accounts as well as attempts to ensure global exchanges decline transactions with the accounts involved, thus denying the criminals the ability to launder their bounty.
Coincheck Inc. confirmed that company funds are being employed to reimburse users, some of whom have instituted legal proceedings against the company in order to secure compensation.