On Sunday it was announced that Coincheck Inc would return 46.3 billion Yen (£302 million) of virtual money to its owners after hackers stole the amount last week in one of the biggest-ever virtual money thefts, according to Reuters.
The amount the company is repaying amounts to about 90 percent of the 58 billion Yen (£378 million) worth of NEM coins the company lost in the attack. It has promised to pay back all 260,000 owners of the NEM coins in Japanese Yen but has yet to figure out a method and the timing.
Japan's Financial Services Agency has notified the roughly 30 firms in the country that deal with virtual currency exchanges and warned them that there could be further possible cyber-attacks, so they should step up their security. The financial watchdog has also said it is considering administrative punishment for Coincheck under the financial settlements law.
Only after April 2017 did it become a legal requirement in Japan for cryptocurrency exchange operators to register with the government. Due to the fact that Coincheck was a pre-existing operator, it was allowed to continue offering services whilst its application, which was submitted in September, was waiting for approval, the application, is still pending.
In 2014, Mt Gox, a cryptocurrency exchange company based out of Tokyo that once handled 80 percent of the world's bitcoin trades, filed for bankruptcy and closed down after losing around £350 million worth of bitcoins.
World leaders who met in Davos last week issued further warnings about the dangers of cryptocurrencies.
Ilia Kolochenko, CEO of web security company, High-Tech Bridge comments: "This case is undoubtedly the largest breach in the foggy realm of crypto-currencies. Nonetheless, I wound certainly refrain from panic: Coincheck's announcement to compensate the victims of the breach is laudable and boosts trust towards digital currencies.
"Incident detection in eight hours is also comparatively good timing: many large companies detect similar incidents in a few months. We can clearly see the difference between amateurs operating Mt. Gox in 2014, and well-prepared professionals behind Coincheck. It is unclear how the breach took place, but I would not exclude insider activities or a at least an accomplice. Hopefully, a technical investigation will shed some light on the incident.
"Steady growth and wider adoption of digital coins continuously increase their attractiveness for cybercriminals. Unlike fraudulent bank or PayPal transactions, theft of digital coins is very difficult to trace and virtually impossible to revert. Despite persistent lack of qualified personnel and insufficient governmental funding, law enforcement agencies managed to build decent teams and effective processes to detect, investigate and prosecute theft from bank accounts.
"However, proper investigation of incidents with crypto-currencies is still nascent in most countries. Lack of regulation, opaque ownership and decentralization - make digital coins a low hanging fruit for cyber gangs who can easily grow their profits without increasing their efforts. I would expect many similar incidents in 2018, unfortunately."