Coincheck Vows to Reimburse Users After $500M+ Digital Theft
Japan is reportedly moving towards stronger regulation of cryptocurrency trading platforms in the fallout of Coincheck’s massive theft. After losing $500M+ to hackers earlier last week, Coincheck has been in the spotlight as many skeptical of the industry saw this digital threat as a clear signal to stay clear of cryptoassets. As Japan looks to instill regulations and monitor such platforms, the consumers and investors are watching very closely as to how this will affect trading and exchange fees. Normally, once government infiltrates private institutions with little oversight, operations became more expensive. This potential increase in prices will negatively affect the consumers’ experience as moving capital to virtual destinations will cost a significant amount more over time.
While cryptocurrency has exploded in the Asian sphere of influence this past year, Japan has been at the forefront for legislating fair guidelines in the industry that not only protect the average consumer, but professional investors as well. This reassurance has helped stabilize the market and improve the relationship between government and public users significantly. As seen in South Korea, once legislators formally announced regulations were imminent for cryptocurrency trading to continue, a large market correction soon followed. Thankfully, Coincheck has vowed to return 90% of the amount of NEM that was stolen through internal funds with an unspecified date. Furthermore, the security that the trading platform was using was by no means best-in-class for running such a large monetary exchange. The added level of security will undoubtedly help protect the investments better and provide a degree of insurance to those who choose to continue trading on Coincheck.
While Japan has required cryptocurrency exchange operators to register back in April, the market was undeterred by the intrusion from officials who went onto Coincheck’s physical campus. As noted, cryptocurrencies have been for the most part stable, unfortunately the transactions on the host network have so far underperformed. Regardless, NEM fell sharply 20% once the news broke, but rebounded back to a modest level over the weekend. The saving grace for the Singapore-based NEM Foundation was that the creators were able to track exactly where the coins went, but have no way of returning them to their rightful owners without legal action being taken. Although this is not the largest cryptocurrency exchange to be hacked, this certainly may be a historic moment in the emerging digital economy as reimbursement of funds lost may be a legitimate result for Coincheck’s customers.
