(Full) Refund: Coincheck Reimbursing Record Cyberattack Victims…Sort Of
Approximately 260,000 holders of XEM (the native cryptocurrency of NEM) can breathe much easier today, for Coincheck announced that affected users of Friday’s record-setting cyberattack will be refunded. The announcement brought widespread relief, but to those more meticulous, it was marred by deception.
Further, the leading Japanese crypto exchange announced that (self-funded) compensation will be added to users’ Coincheck wallets in Japanese Yen (¥); the timeframe remains indefinite. The amount that users are entitled to will be determined using the exchange rate of one XEM unit to 88.549¥. In total, 523 million XEM were stolen on Friday, which is roughly $534 million (USD).
Sparking controversy, this ¥:XEM exchange rate employs the tarnished price of XEM after news of the cyberattack had permeated the stunned crypto community. Affected investors are calling out Coincheck on this questionably moral decision, demanding that their refund be calculated using the (much higher) price of XEM before such news broke. Alternatively, others don’t understand why reimbursement isn’t simply in XEM; given this is what was stolen, it appears an uncontroversial resolution.
In closing the saga that sent markets plummeting on Friday, Coincheck issued one last apology:
Along with the recent illegal remittance, we apologize for any inconveniences caused by customers, business partners and related parties, such as suspension of some services.”
This record-breaking hack comes after 2017 saw many notable exchanges fall prey to cyberattacks, such as Etherdelta and Youbit, which was driven to bankruptcy after incurring two hacks within the space of eight months.
The Coindesk incident serves as yet another reminder to all crypto investors about the necessity to move their holdings off exchanges. Failing to do so means that control of the user’s balance ultimately lies with the exchange; if subject to a hack, there is a very real possibility that some users’ account balances disappear.
It is strongly advised that coins are transferred into a hardware wallet or cold storage. This is even more pertinent for those heavily invested, and uninterested in day-trading or using cryptocurrency in everyday life. Both storage options grant the user control of their private keys; the same cannot be said by those with their funds tied up in exchanges.
Refund Image From Shutterstock