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A History of Coincheck, NEM, and the Largest Cryptocurrency Hack Ever

Nov 14, 2018

 

  • New Economy Movement, or NEM, is an enterprise-grade blockchain solution built to power the “impending” blockchain economy. First launched as a fork of NXT, the NEM blockchain enables a Smart Asset System, which is an open, customizable blockchain solution where developers can address limitless use cases by building on top of the NEM network. Currently, the underlying coin behind the NEM blockchain, XEM, is the 16th largest cryptocurrency in the world by market capitalization.  
     
  • On January 26th, 2018, large Japanese cryptocurrency exchange Coinckeck suffered a devastating theft when hackers successfully stole 523 million XEM, worth around USD$534 million at the time -- the 523 million token theft represents 5.81% of XEM's total market capitalization and is still the largest hack in cryptocurrency history to date.
     
  • Following the hack, Coincheck was forced to temporarily halt withdrawals and eventually stop operations entirely while Japan’s Financial Services Agency responded by conducting on-site inspections of 15 unregistered cryptocurrency exchanges in the country. Coincheck began refunding customers who lost funds on March 8th, 2018 at a rate of 88.5 yen (around USD$0.83 at the time) for one XEM.
     
  • Japanese financial services firm Monex Group acquired 100% of Coincheck for 3.6 billion yen (USD$33.5 million) on April 6th, 2018.  
     
  • After months without news, Monex Group announced on October 30th, 2018 that it had reopened new account signups while offering limited trading services for Bitcoin (BTC), Ethereum Classic (ETC), Litecoin (LTC), and Bitcoin Cash (BCH).
     
  • In its announcement, Monex Group assured users that they implemented enhanced anti-money-laundering and counter-terrorism financing measures along with a strict know-your-customer process. 
     
  • Two weeks later on November 12th, 2018, Coincheck announced that it resumed normal trading services for XEM, available to all users. XEM surged as high as 20% on the news -- it has since given up its gains as a result of today’s cryptocurrency sell-off, falling 12% in the last 24 hours.
     
  • The 20% uptick in XEM's price following Coincheck's November 12th announcement is surprising. Several cryptocurrency exchanges across the world, including the world's largest cryptocurrency exchange, Binance, offer trading pairs for XEM. The uptick, however, did effectively offset significant losses observed across the rest of the cryptocurrency market, with XEM now trading near price levels seen prior to the Coincheck announcement. 

NEM (XEM) 1-Month Price Chart

Source: TradingView