
Tokyo-based cryptocurrency exchange hacked, losing $530M: NHK - RmDen
https://www.reuters.com/article/us-japan-cryptocurrency/tokyo-based-cryptocurrency-exchange-hacked-losing-530-million-nhk-idUSKBN1FF29C
======
ReverseCold
Posting this as a top level comment as well (probably a better idea):

The coins stolen are XEM ([https://nem.io/](https://nem.io/)) not Bitcoin.
They're currently tracking the stolen coins to ensure they are not sold.

Preliminary evidence suggests that it was a private key stolen and not a
network problem.

Disclaimer: Am somewhat associated with the team, and I hold a small amount of
XEM.

Feel free to ask questions.

~~~
justboxing
Over 100 Million XRP ( Ripple ) worth 130 Million USD was also allegedly
stolen.

Source:

Here's the original tweet from Bloomberg Tech Reporter in Toyko, Yuji
Nakamura.
[https://twitter.com/ynakamura56/status/956790270036619265](https://twitter.com/ynakamura56/status/956790270036619265)

Tweet In English:

> Japanese crypto exchange Coincheck halts withdrawals, deposits, trading in
> NEM. Rumors is a big chunk was moved from their wallet. Also seems >$130m of
> XRP moved out too. I called Coincheck, but they wouldn't answer questions
> and asked me to email them

Here's the actual Ripple XRP Transaction that is moving the 101-ish Million
XRP out of the Coincheck account.
[https://xrpcharts.ripple.com/#/transactions/FC32DBF1C0CE6780...](https://xrpcharts.ripple.com/#/transactions/FC32DBF1C0CE6780A669349FEDF7BD9EC18033EB79B3DC8F1ADBAE9B5EAD3EF8)

Here's a news page / story that is following this and updating it frequently.
It mentions that XRP was also stolen in addition to NEM.
[https://bitpinas.com/news/coincheck-suspends-nem-trading-
rum...](https://bitpinas.com/news/coincheck-suspends-nem-trading-
rumor-460m-xem-lost/)

~~~
TheAdamist
The stolen 101m xrp moved into an account that already had 3billion xrp? That
seems odd to begin with. Is it another exchange or coin tumbler or something?

~~~
ribosometronome
That wallet only has 45 transactions on it -- that doesn't seem reasonable for
a tumbler or an exchange, does it?

Also, 3 billion XRP means that they have 12% of all circulating XRP right now.

------
hartator
They are tainting the stolen coins to avoid them to be sold. What’s the point
of having a decentralized currency if a centralized entity make the decisions
anyway at the end of day?

~~~
CryptoPunk
NEM (the cryptocurrency that was stolen) isn't decentralized.

~~~
viach
Why not using a web site built on postgres or mysql database to track balances
then, instead of using blockchain and call the thing "cryptocurrency"?

~~~
chvid
Because then it would be evident to anyone that you were running a pyramid
scheme and law enforcement could shut you down by just closing down a single
server?

~~~
viach
Is it still applicable to NEM, as it's centralized?

------
LAMike
The 0x protocol will allow for decentralized exchanges, so hacks like this
would be a thing of the past if it gains adoption.

[https://0xproject.com/](https://0xproject.com/)

~~~
ReverseCold
It's still impossible to have a decentralized exchange convert between USD and
a coin.

XEM (the coin that was stolen) doesn't have plans to implement 0x, but there
are other plans for decentralized exchange.

~~~
csomar
Why not? By using a usd-token like usdt it become possible. Bitshare usd also
has been very stable lately and it is fully decentralized.

~~~
Daishiman
Somebody has to guarantee that the the USD are actually there to perform a
trade. There's no other way to guarantee that that doesn't imply going off-
chain.

~~~
AlexSolution
MakerDAO uses collateralized smart contracts to provide stability to their Dai
token. Right now, only ETH can be used as collateral, but in Q2 they are
starting multi-collateral support.

[https://makerdao.com/](https://makerdao.com/)
[https://coinmarketcap.com/currencies/dai/](https://coinmarketcap.com/currencies/dai/)

~~~
Daishiman
Their whitepaper's explanation of how this works is _horrendously_
complicated. There's no way you can encode that sort of logic into a
cryptocoin in a bug-free manner. Steer clear of this.

~~~
AlexSolution
Their contracts are up. If you can find a way to exploit one of the bugs, you
can profit massively.

~~~
dingo_bat
If your profit is massive enough they may even roll back the chain and do a
hard fork!

------
tn_
I don't understand why news like this doesn't have that huge of an impact of
bitcoin's price.. Bitcoin seems to be hovering around 11k~ as I'm writing
this. It's been at the same price it seems for the past couple of days...

~~~
user9182031
Could you share why you think it would impact the price of Bitcoin? With a
market cap of 186 billion dollars, and a daily volume of 10 billion I couldn't
see how it'd have that much of an impact.

~~~
dumbfounder
Because it makes it seem like exchanges are not trustworthy places to keep
your crypto, and for basic users a lot of people just keep their crypto there.
Fear, no matter how how misplaced, can cause markets to sway heavily.

~~~
trey-jones
Exchanges are not a trustworthy place to keep your crypt. I think that is
accepted. What does it have to do with the value of the thing?

~~~
dumbfounder
Imagine you have 2 sets of keys to your house and if you lose both then your
house is not yours anymore. That's what keeping your money outside an exchange
seems like to me. Exchanges are easy and familiar to people.

If there was some secure way to do password recovery that was built into the
currency that might be a game changer. That might be impossible by definition,
not sure.

~~~
icebraining
I think you definitively could make something like Keybase on Bitcoin, by
using multiple third-party institutions (chosen by the user) as a fallback.

When sending coins to your storage address, you'd say "anyone can use this
money if they have this private key OR if they get a digitally-signed
certificate from 3 out of 4 of these keys (A, B, C, D)". Those keys could
belong to different institutions (or persons) that would declare they vouch
for your identity.

Then if you lost your key, you'd go to each of them to get your certificate
signed and could then use the coins again.

\--

Of course, this means that if those institutions colluded, or all got hacked,
you could still lose your coins, but it'd be harder than just keeping them in
an exchange.

~~~
KMag
Too bad Bitcoin uses ECDSA instead of Ed25519 (or any other signature
algorithm supporting threshold signatures). With threshold signatures, you
don't even need something in the wallet saying "any N of the following M", you
could just give secret shares to those M parties, and any N of them could
collaborate to sign something using your single public key.

~~~
glitch003
You could just do that anyway by running Shamir's Secret Sharing Scheme on a
Bitcoin private key, splitting the key into M parts where any N of M parts can
be combined to recover the original private key.

~~~
KMag
That's a fair point, but threshold signatures are more generally useful, such
as N of M board members authorizing payment to X, without having to place
trust in a single board member not to change the transaction to a different
amount or address.

------
s0rce
Wow, didn't know Mt. Gox lost 850k BTC, thats 9B USD at the current price. Are
these coins traced? Were they quietly sold or are hackers sitting on billions
in BTC?

~~~
stuxnet79
Kim Nilsson's group have been investigating the Mt Gox incident for years and
he gave a presentation some time ago that summarized some of their findings
([https://www.youtube.com/watch?v=l70iRcSxqzo](https://www.youtube.com/watch?v=l70iRcSxqzo)).

One of the best summaries of the Mt Gox incident, as well as the fallout and
subsequent investigations that I've watched.

~~~
dmix
Any TLDW for the primary theory on who did it? Inside job?

~~~
stuxnet79
Well worth watching IMO. TLDW, MtGox was compromised more than a dozen times
and if 'MagicalTux' and Co would have done their due diligence and notified
users the scale of the theft wouldn't have been as high as it ended up being.

------
m3kw9
A lot of people take for granted of a bank guarantees from govt. In a bank you
are protected if the bank burns down or gets robbed empty. Unlike the Wild
West here

~~~
fpgaminer
I remember naively believing that FDIC covered theft. There are little notes
and placards posted all over banking websites and physical locations
advertising that your funds are insured by FDIC. I'll bet most people who see
those signs believe the same thing I believed: that "insured" in that context
meant your funds were protected. Against theft; fire; fraud; etc. Right?

But FDIC _doesn't_ cover theft. Or anything else. It only covers bank failure.
Bank runs were a real problem back in the old days, and the fear of it drove
most people to leave their cash in mattresses. So FDIC was created to
alleviate those fears and get cash back into the banks. That was, and is, its
only purpose.

Not that that isn't a useful thing. It certainly came in handy again during
our last recession. But this knowledge raises an important question. If FDIC
is the only insurance I've seen advertised by banks, and it only covers bank
failure ... what covers everything else?

I assume, hopefully, that banks have private insurance policies or something.
Maybe they're legally required to have a private insurance policies. I just
don't know. I bet most people don't know.

Very interesting stuff.

~~~
tlb
Theft from the bank doesn't take money out of anyone's individual account, so
individuals don't need to be insured against it. Most bank thefts are small
relative to assets, but if the theft is so large that the bank fails, then the
FDIC insurance ensures that customers get repaid. The same is informally true
for cryptocurrency exchanges: theft from the exchange's own wallet doesn't
directly affect customers unless it causes the exchange to become insolvent.
Then the customers will wish they had insurance.

------
cflewis
As someone who knows very little about the blockchain, I was wondering if the
Bitcoins are "known"? Like, they have a hash or something? Can't they be then
blacklisted from use somehow?

I thought the whole point of the blockchain was that all the transactions were
all known?

~~~
jbtule
You'd need consensus of the miners to do so.

~~~
tooop
Nothing to do with miners. It is all about exchanges.

~~~
ht85
Miners would be the correct level for such a thing.

By blocking a specific address, it would effectively freeze all the funds held
by it, preventing them from being transferred to anyone, including exchanges.

------
gesman
Conclusion: If you keep any cryptocurrency on an exchange or online service
that can or is capable of controlling your private keys - MOVE all your
cryptos to your own deterministic wallet YESTERDAY!

~~~
tomc1985
I would have had Bitcoin at a much more opportune time if I could have gotten
Armory to work. The idea that one must download the entire blockchain makes
maintaining a wallet very difficult for some, esp. if the wallet software
doesn't accept the data at the end of the dozens+GB download.

~~~
staplers

      The idea that one must download the entire blockchain makes maintaining a wallet very difficult
    

Totally false. There are plenty of wallets that allow you to connect to a
decentralized network of servers hosting the blockchain.

Electrum, Multibit to name a few.

~~~
tomc1985
maybe, but I don't recall encountering any of these years ago

~~~
staplers
They have been around for over 5 years. I used them 5 years ago..

------
x775
Ouch.

Something like this is incredibly regrettable, and a large amount of
presumably novice investors have no doubt burnt their fingers. Yet, incidents
like this once again underscore the importance of controlling your private
keys. Until you do that, you do not really own your coins.

I suppose this also highlights the need for decentralised exchanges.

------
monkmartinez
How often do major banks get hacked and "lose" money?

~~~
mrb
It happens admittedly less often, but it does happen. For example $60 millions
were stolen and never recovered from
[https://en.wikipedia.org/wiki/Bangladesh_Bank_robbery](https://en.wikipedia.org/wiki/Bangladesh_Bank_robbery)

~~~
jhwang5
This is all you could come up with?

------
matt_wulfeck
If only there was some trust built into the system. Then that money could all
be recovered.

------
larkeith
Bitcoin and other cryptocurrencies remain in technological infancy relative to
the absurd amount of investor interest they hold. Hacks of this scale will
likely continue to occur for the forseeable future, until exchanges develop
and deploy techniques to limit potential lossage to hacks (e.g. minimal
networked wallets), and will require several more years to provide a secure
track record.

In the interim, the convenience of exchange bitcoin storage will continue to
come at an increase in risk.

~~~
ReverseCold
This seems to be exchange incompetence, their only wallet as a hot wallet.

Disclaimer: I hold some XEM, have contributed to source, etc.

~~~
larkeith
IIRC the only thing remotely close to breaking a crypto we've seen is the DAO
hack; otherwise, it's generally incompetency somewhere along the chain, so
that's not at all surprising to hear.

Rather astonishing in magnitude (a _single hot wallet_?), but such is tech.

~~~
baby
crypto has been broken a lot over the past, look at MD5, RC4, DES, SHA1, ...

------
edshiro
This kind of news is the reason why people should seriously consider buying a
hardware crypto wallet if they plan to put significant sums at risk.

I've started trading in this space with a modest amount, but as I plan to
increase some of my investments I am definitely considering purchasing a
wallet.

I would sleep better if I knew my coins were not held within the exchange.

~~~
CyberDildonics
You don't need a hardware wallet, you just need to CONTROL YOUR PRIVATE KEYS
AND NOT KEEP YOUR MONEY IN AN EXCHANGE.

This gets repeated over and over, but people just don't listen until it is too
late. Keeping money on an exchange is the antithesis of why crypto-currencies
were invented in the first place.

~~~
AlexCoventry
A hardware wallet is probably a good way for most people to do that, though.

Most people getting into cryptocurrency at this point aren't going to be able
to spin up a secure debian box, download and run zcashd, run it until it syncs
with the network, construct a transparent address, round-trip a test portion
of their exchange funds through the address, park their on-exchange zcash
there, and put the wallet.dat file somewhere secure from hacking or
destruction. But my understanding is that Ledger can handle transparent zcash
transactions, which potentially massively simplifies matters.

------
ezoe
When do the people learn? If you hand over the control of your crypto-currency
to the central trade authority, it completely ruins the value of crypo-
currency.

You should rather use traditional nation-backed currency at regulated trade
authority.

------
snissn
decentralized exchanges and cross chain atomic swaps are looking really
interesting lately

