Coincheck Mulling Capital Tie-Up after Massive Cryptocurrency Theft

February 25, 2018

Tokyo- Japanese virtual currency exchange operator Coincheck Inc. is considering a capital tie-up to strengthen its financial base and regain trust following a massive cryptocurrency theft from the exchange in a hacking incident about a month ago, informed sources have said.

There have emerged several possible partners, including an investment fund, according to the sources. "Conicheck's customer base of over one million is fascinating," an official in the virtual currency industry said.

But at the same time, there are concerns that Coincheck could lose customers after the hacking incident and that it may become a cyberattack target again. "Investing in the company could involve great risks," an official at a financial institution said.

Coincheck expressed its eagerness to continue its business in a statement on Monday, saying that the company will strengthen its computer security system and information disclosure policy.

In the 20-minute hacking attack early on Jan. 26, about 58 billion yen's worth of cryptocurrency NEM was transferred from the exchange to a single account, according to information security experts.

Part of the stolen money has been dispersed to more than 400 accounts, and some other part has gone missing.

There are suspicions that over 10 billion yen's worth of NEM as of the theft has already been exchanged in highly anonymous Internet space called the dark web, information security specialist Takayuki Sugiura said.

Following the massive theft, Coincheck suspended customers' withdrawals of both yen and virtual currencies from their accounts at the exchange. On Feb. 13, it resumed yen withdrawals only.

The Tokyo-based company has announced that it will pay a total of 46.3 billion yen in compensation to about 260,000 affected customers, but has not released details, including when the payment will be made.

The Metropolitan Police Department of Tokyo is investigating the NEM theft as a case of suspected violation of the unauthorized access prohibition law, with about 100 officers mobilized for data analysis.

Senior MPD officials said that the investigation into the crime, which occurred in the borderless cyberspace, could take quite a long time.

"We'll steadily do what we should although the task is difficult," one official said. Jiji Press