It was four years ago that virtual currency exchange Mt. Gox collapsed in Japan whose memory is yet to fadeaway, and now the investors in the country were spooked after the disclosure of about $400 million in NEM tokens getting lost at one of Japan’s biggest cryptocurrency exchanges.
The coins were sent “illicitly” outside the venue, said Coincheck Inc. just hours after speculation of the event on Friday night. Co-founder Yusuke Otsuka said that the company working to ensure the safety of all of the assets of the clients and the firm was vert unsure about how the 500 million tokens went missing.
deposits into NEM coins were stopped, trading in all tokens except Bitcoin were halted and all withdrawals were suspended by the company, Coincheck said earlier
“We know where the funds were sent,” Otsuka said during a late-night press conference at the Tokyo Stock Exchange. “We are tracing them and if we’re able to continue tracking, it may be possible to recover them. But it is something we are investigating at the moment.”
This theft is considered to be amongst the highest in terms of fraud of any form of digital currency kept as investor assets ever since 2009 when the first digital currency bitcoin was launched. It is “looking into the facts surrounding Coincheck”, said Japan’s Financial Services Agency in a statement.
There was a fall of 11 per cent in the value of the NEM which is the 10th largest cryptocurrency in the world by market value. And according to Coinmarketcap.com, the fall, in a matter of 24 hours, resulted in its value reaching 87 cents, as of 2:30 p.m. Tokyo time on Saturday.
“The ‘investors’ that did not do due diligence and take time to understand what they’re trading in, both venue and subject matter, face unhedgable risks. If they continue to ‘trade’ the same way knowing the murky nature of this market, they’re gambling,” said Yvonne Zhang, who had spoken on a panel on the future of cryptocurrencies at an Association of Futures Markets conference in Bangkok on Friday.
In a tweet, Takeshi Fujimaki, an opposition Japan Innovation Party politician said “I’m shocked”. Takeshi Fujimaki is a politician of the Japan Innovation Party and he had once briefly served as an adviser to George Soros. There was an investment of over 10 million yen worth of Bitcoin in Coincheck by him, he wrote.
With the aim of preventing a reoccurrence of the Mt. Gox exchange collapse, the policy markers in Japan have initiated a licensing system to enhance oversight of local venues. Japan is amongst the largest markets for trading in cryptocurrencies and the market, along with the global cryptocurrency market, was rocked globally in 2014. About $450 million was the value of the total theft of bitcoin at that time even though the figure was later revised down.
(Adapted from Bloomberg.com)