January 26th was a bad day for CoinCheck. The famous exchange announced that $530 million worth of XEM (NEM) was stolen by hackers. The company executives stated that in a press conference and revealed more details about the hack linked to the infrastructure of their crypto exchange.
As they reported, the CoinCheck trading platform was not supporting multi-signature technology and stored all of the hacked funds in a hot wallet. That being said, its developers are still not sure how the exchange was hacked. Today, most of the major cryptocurrency exchanges such as Coinbase, Kraken and Bitfinex have multi-signature security measures which are designed t prevent funds from being processed on a public blockchain network.
Obviously, the lack of a multi-signature service is what costs $523 million of cryptocurrencies and what made a security breach possible. If there is any good in the situation, it has to be the fact that only NEM was impacted and that there are no multi-signature options. The security of the site was weak though – and they don’t know how it was hacked.
At this point, all eyes are on the (decreasing) number of users who got ripped off. The key takeaway from the situation is that you shouldn’t store funds on exchanges such as CoinCheck and instead store your crypto assets in non-custodial platforms where you have full control over your private key.
The Tokyo- based cryptocurrency has developed a plan to compensate approximately 260,000 NEM holders for the hack. They apologized for any inconvenience caused to business partners, customers and related parties and stated that they are committed to resuming the services and investigating the case further.
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