Japanese cryptocurrency exchange promises refunds after hack

Japanese cryptocurrency exchange Coincheck has announced it will refund investors most of 58bn yen (£380m) worth of digital coins stolen by hackers last week.

Around 260,000 users of the exchange are believed to have been affected by the hack on Friday, with the thieves targeting the lesser-known NEM coin, BBC News reports.

Coincheck’s losses exceeds those suffered in the attack on the now-defunct Mt. Gox cryptocurrency exchange in 2014, when cyber thieves stole around $460m (£327m) worth of bitcoin, says The Guardian.

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According to the newspaper, Tokyo-based Coincheck kept its users’ digital currencies in online-based storage systems known as “hot wallets”. These are not as secure as “cold wallets”, which are hosted offline and are therefore less vulnerable to cyberattacks.

The exchange was unable to run more secure cold wallet storage systems “because of technical difficulties and a shortage of staff capable of dealing with them”, The Guardian adds.

Last week’s digital heist has triggered an investigation by Japan’s financial regulator into “all cryptocurrency exchanges”, reports Reuters. The watchdog has also “ordered Coincheck to submit an incident report and measures for preventing a recurrence by 13 February”, the website says.