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Coincheck Raided a Week After Hack

Exactly a week after the plunder of more than USD 400 million, Coincheck was raided by the Japanese Financial Services Agency, as reported by Nikkei Asian Review.

Coincheck now has until February 13 to to submit a report detailing the causes of the incident and how it will improve internal controls. FSA officials, who said that this is the first time that they’ve raided a cryptocurrency exchange, declined to comment on Coincheck’s financial condition.

The incident last week has added to a growing perception that cryptocurrencies are particularly vulnerable to hackers.

After a cabinet meeting on Tuesday, Japanese finance minister Taro Aso demanded the strengthening of management systems at domestic cryptocurrency exchanges while urging regulators to “appropriately monitor” the ecosystem to protect consumers. He added, “It was a matter for great regret that illicit access caused a massive cryptocurrency outflow from Coincheck on Friday.” Japan last April enacted laws designed to prevent such an attack, but Aso said this week regulators were not aware of the security lapses at Coincheck, according to Bloomberg.

Theories about how the hack was pulled off abound, but the fact is, Coincheck has not disclosed how this has happened; although NEM claims it was because Coincheck failed to use the multisig verification system, the exchange platform remains silent.

The fear of a similar hack reoccurring is very real even beyond Japan: South Korean experts warn of their own cryptocurrency exchanges not using very advanced security systems that are at their disposal. It is presumed that broader and more advanced security measures will have to be implemented, to prevent a replay.

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