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Let’s discuss cryptocurrencies

This week’s featured article

KAZUAKI NAGATA, THE JAPAN TIMES

Echoing the Mt. Gox fiasco nearly four years ago, Tokyo-based cryptocurrency exchange Coincheck disclosed Friday it had been hacked and lost about ¥58 billion ($532 million) worth of its holdings, sending clients into a panic about the fate of their virtual assets.

If confirmed, the heist would surpass the ¥48 billion ($390 million) lost in the collapse of bitcoin exchange Mt. Gox in February 2014 and go down as the largest cryptocurrency theft since the advent of bitcoin.

Coincheck Inc., one of Japan’s major cryptocurrency exchanges, said it discovered a significant drop in the balance of its NEM virtual currency at around 11:25 a.m. Friday after about ¥58 billion of it was illegitimately transferred.

In a blog post at 12:07 p.m., customers were notified that their NEM deposits had been suspended and that they would be updated when more information was available. But the operational halt only widened, and the startup subsequently froze all withdrawals at 4:33 p.m.

It then froze all trading in virtual currencies except bitcoin at 5:23 p.m.

“We are deeply sorry for troubling people with this issue,” Coincheck CEO Koichiro Wada said at a nearly 90-minute news conference that lasted into Saturday morning.

Coincheck COO and cofounder Yusuke Otsuka said the firm is looking into what happened but remains unsure of how it was hacked and how many customers were affected. Coincheck said it reported the incident to the police and the Financial Services Agency. Whether the company will be able to recover the lost digital tokens is unclear, and how to compensate clients if it can’t is an issue under consideration, Otsuka said.

Asked whether the firm had sufficient security measures in place to protect its clients, an official said they were doing their best but admitted they might have come up short.

For instance, Coincheck’s website says that bitcoins are to be stored offline when they are not being traded. Wada said its bitcoins were indeed stored offline but that the more than 5 million NEM coins that were stolen were not.

Due to the surging interest in blockchain technology and the collapse of bitcoin exchange Mt. Gox in 2014, Japan made legal revisions in April to tighten regulations on virtual currency exchanges.

First published in The Japan Times on Jan. 28.

Warm up

One-minute chat about worries.

Game

Collect words related to “money,” e.g., bank, coin, pay.

New words

1) cryptocurrency: virtual asset, e.g., “Cryptocurrency creators hope the assets can provide a digital outlet for wealth.”

2) heist: a robbery, e.g., “The casino heist was planned years in advance.”

Guess the headline

Co _ _ _ _ _ _ _ hacked in ¥58 billion cr _ _ _ _ _ _ _ _ _ _ _ _ heist, four years after Mt. Gox

Questions

1) What happened?

2) Is this the first incident with cryptocurrency?

3) Was Coincheck’s security sufficient?

Let’s discuss the article

1) Are you interested in virtual currencies?

2) What do you think about the incident?

3) What do you think is needed when it comes to securing cryptocurrency?

Reference

この1年足らずで空前の盛り上がりを見せている仮想通貨ですが、その不安要素が露呈する事件が起きてしまいました。まだ国民の十分な知識も各国の規制も整っていないなか、”仮想”の世界で取引される莫大な資金の安全性は管理会社に頼るしかない状況が続いています。

仮想通貨と私たちはどのように向き合っていくべきなのか、朝の会に参加し皆さんで話し合ってみましょう。

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