Coincheck Crypto Exchange Issuing $400M In Refunds To Customers Hit By NEM Hot Wallet Hack
A cryptocurrency exchange in Japan is ponying up hundreds of millions of dollars out of its own pocket to compensate customers who had their NEM tokens stolen last week. The theft is believed to be the largest ever in the cryptocurrency community, with hackers plundering 523 million NEM coins worth anywhere from $400 million to $600 million, according to estimates based on different values.
Coincheck initially halted trading of all tokens except Bitcoin after the theft occurred. At the time, Coincheck co-founder Yusuke Otsuka said the exchange was investigation the hack, with hopes of figuring out where exactly the stolen coins ended up.
"We know where the funds were sent. 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," Otsuka said.
Now the company is saying it will refund all 260,000 users affected by the hack, at a rate of 88.549 yen per coin, which works out to around 82 cents in U.S. currency. In total, Coincheck is looking at around $429 million in compensation for the 523 million coins that were stolen.
The exchange said it calculated the value of the stolen coins based on the weighted average price of NEM from when it suspended trading to today's notice. That is a lot of money, obviously, though some have criticized Coincheck for not issuing a larger amount.
"Along with the recent illegal remittance, we apologize for any inconveniences caused by customers, business partners and related parties, such as suspension of some services. We are committed to restarting services including investigation of causes and strengthening of security system and will continue our business in the future as well as ongoing efforts to apply for registration of virtual currency exchange companies to the Financial Services Agency," Coincheck said in a statement.
While some may feel the valuation is not fair, at least Coincheck isn't shutting up shop and filing for bankruptcy protection like Mt. Gox did. What's not clear, however, is how Coincheck was able to come up with the funds to repay customers.