Coincheck hackers try to move stolen crypto-currency

Read time 3min 00sec
Tokyo-based exchange Coincheck.
Tokyo-based exchange Coincheck.

Hackers who stole around $530 million worth of crypto-currency from the Coincheck exchange last week -- one of the biggest such heists to date -- are trying to move the stolen "XEM" coins, the foundation behind the digital currency said yesterday.

NEM Foundation, the creator of the XEM crypto-currency, traced the stolen coins to an unidentified account, and the account owner had begun trying to move the coins onto six exchanges where they could then be sold, Jeff McDonald said.

Hackers made off with roughly 58 billion Japanese yen ($533 million) worth of the crypto-currency from Tokyo-based exchange Coincheck late last week, raising fresh questions about security and regulatory protection in the booming market.

The location of the hackers' account was not known.

"[The hackers are] trying to spend them on multiple exchanges. We are contacting those exchanges," Singapore-based McDonald told Reuters.

NEM Foundation spokeswoman Alexandra Tinsman said the hacker had started sending out "XEM" coins to random accounts in 100 XEM batches, worth about $83 each.

"When people look to launder these types of funds, they sometimes spread it into smaller transactions because it's less likely to trigger [exchanges'] anti-money laundering [mechanisms]," said Tom Robinson, co-founder of Elliptic, a crypto-currency security firm in London.

Robinson said such hopping among different crypto-currencies was becoming more prevalent among cyber criminals trying to cover their tracks.

The coins the hackers had taken made up around 5% of the total supply of XEM, the world's 10th biggest crypto-currency, according to trade Web site Coinmarketcap.

McDonald said the hackers were unlikely to try to spend anything close to all of the stolen crypto-currency at once, because the "market simply couldn't absorb that much".

If the hackers successfully moved the coins to an exchange, they were likely to try to swap them into another crypto-currency before transferring the coins back into a conventional currency, he said. That would make the funds difficult or near impossible to trace.

"I would assume that they are going to get away with some of the money," McDonald said.

Crypto-hopping

At least three-dozen heists on crypto-currency exchanges since 2011 are known; many of the hacked exchanges later shut down. More than 980 000 Bitcoins have been stolen, and few have ever been recovered.

In 2014, Tokyo-based Mt. Gox, which once handled 80% of the world's Bitcoin trades, filed for bankruptcy after losing Bitcoins worth around half a billion dollars -- then the biggest such heist, which triggered a huge sell-off in Bitcoin.

"It shows how far the industry has come that a hack of this scale isn't really an issue," said Robinson. "This is just kind of a blip."

As of 1744 GMT, XEM was trading at around $0.83 per coin, with a total market value of around $7.5 billion. That was around 20% lower than trading levels on Friday, when the hack was announced, but XEM is still up almost 300% over the past two months.

Japan's Financial Services Agency on Monday ordered improvements to operations at Coincheck, which on Friday suspended trading in all crypto-currencies except Bitcoin.

Have your say
Facebook icon
Youtube play icon