Coincheck Hack Victims to Be Paid Back by the Exchange

In order to resume their operations as soon as possible, Coincheck said they would be compensating the users who had fallen victim to their hack starting next week, Bloomberg reported.

At a news conference on Thursday, the Tokyo-based cryptocurrency exchange company said that all of the 260,000 users impacted by the theft of XEM, a cryptocurrency of the NEM blockchain platform. The reimbursement will be according to the conversion rates detailed by Coincheck after the attack. Koichiro Wada, CEO, said the exchange made enough money from spread trading to fund the payback, which amounts to 88.549 yen (USD 0.83) for each of the 523 million stolen XEM.

Yusuke Otsuka, Coincheck’s chief operating officer, said that the exchange has improved its security measures and is working to compensate users. Customers have withdrawn about USD 566 million in cash since the incident, he said.

Ever since the theft, XEM prices have plummeted and were trading at about USD 0.3 before Coincheck’s announcement on Thursday. The prices rose as much as 7% after the exchange said it will start compensating users. Still, this means hackers now own considerably less than the amount the victims are going to receive in compensation.

While it is still unknown exactly who was behind the theft, part of the stolen funds was traced to Canada. Japan is pressuring crypto exchanges to up their security measures as much as possible, followed by surprise raids and threats of suspension. Coincheck has faced a number of lawsuits being filed against them, although hopefully, after these news, things may start looking up for them once again.

“As a community, we were harshly reminded that we are only as strong as our weakest link.<…>The XEM trading exchange has had a wake-up call to double-check security measures and deploy all necessary security mechanisms moving forward,” NEM.io Foundation president Lon Wong said on a blog post on March 8.