Coincheck To Refund All Customers Affected By Hack, Faced By Community Support

Japanese cryptocurrency exchange Coincheck has announced Saturday, Jan. 27, that it will issue full refunds to all of the 260,000 of its users who have become victims of the Friday NEM hack.

The Coincheck exchange has been hacked yesterday, Jan. 26, resulting in a massive loss of 523 mln NEM coins, worth approximately $534 mln at that time. During a press release following the hack it has been revealed by the exchange’s representatives that the funds were stored on a single-signature hot wallet, constituting a relatively low-security environment.

The company has now confirmed its intention to refund the stolen money to the affected users. According to the announcement, the refunds will be done using the exchange’s own capital.

The company is still considering the exact timing and methodology for the process. However, it has already announced that the compensation for each NEM coin will be JPY 88.549, which is the weighted average exchange rate during the period from when the trading was halted to the release of the latest announcement.

Coincheck indicated that they are referencing the XEM/JPY exchange rate at Zaif, another Japanese exchange which has the most trading volume for XEM globally.

Furthermore, Coincheck has again confirmed their intention to stay in business, as opposed to declaring bankruptcy, saying:

”Along with our ongoing efforts to file applications to be registered as a Cryptocurrency Exchange Service Provider with Financial Services Agency, we will continue business."

Community reacts favorably
The theft of the NEM coins represents the largest hacking event in the history of cryptocurrency since the infamous Mt. Gox collapse, which also took place in Japan. The fact that the local community has already been “battle-tested” has likely contributed to it remaining largely unfazed by the latest event.

This is most apparently reflected through the numbers, as the Japanese cryptocurrency markets are on the rise today, less than 24 hours since the hack has taken place.

NEM also responded favorably on a global scale, with a nearly 30 percent jump on Coincheck’s announcement, according to Coinmarketcap.

The need to support Coincheck, especially in light of their commitment to refund affected customers, has been a common sentiment among Japanese crypto community’s opinion leaders today, even as they acknowledged the exchange’s part in not providing sufficient security for its NEM wallet.

Meanwhile, the development team behind NEM has announced that it is working on an automated system that will track the stolen coins and tag all addresses that receive the “tainted” money. This will allow any cryptocurrency exchange to blacklist the hackers’ accounts, preventing them from ever cashing out their illegally obtained fortune.