The Coincheck exchange hack sent shockwaves through the crypto community, and analyst Nicholas Colas says to expect more such hacks in the future.
The hack of the Japan-based Coincheck crypto exchange last week was huge. Roughly 523 million of its NEM coins were stolen, causing the exchange to shut down all withdrawals, except for Bitcoin. The overall value of the stolen coins is around $534 million. However, the crypto market stabilized pretty quickly, but more trouble may be coming. In an interview with CNBC, analyst Nicholas Colas said that more exchange hacks will happen.
Hundreds of Millions Stolen
The Coincheck hack does have some silver linings. First, the exchange is planning on reimbursing the 260,000 accounts affected by a total of $425 million. This accounts for 90% of the stolen funds, which is not too shabby in lieu of the alternative.
Secondly, the Japanese Financial Services Agency (FSA) doled out its punishment to Coincheck, but it was not as severe as had been feared. Basically, the exchange has to fully explain the circumstances of the hack and institute a series of upgrades to prevent “similar events in the future.”
Of the attack, Nicholas Colas, the co-founder of DataTrek Research, told CNBC:
I think [the attack] does highlight the fact that the industry still has a long way to go in terms of basic issues of security. This is certainly not the first, nor will it be the last, such hack attack on cryptocurrencies and, all things considered, I think they’re taking it fairly well in terms of price.
Bracing for More Hacks
Nicholas Colas explained that Coincheck keeping so much of their assets in a hot wallet was not a good idea. He went on to say:
Keeping 100 percent of your crypto assets online is a bad idea for an institution, or frankly, for an individual who has a large amount invested in it as well.
Colas also told CNBC that a group, and not an individual, was likely the culprit behind the Coincheck hack. He explained:
The typical hackers in cryptos have been organized groups [as opposed to] lone attackers. Because, obviously, once you get the coin, you’ve got to figure out how to atomize it and monetize it in some way and that’s a bigger challenge than typically one person can do.
There’s little doubt that more crypto exchange hacks will be attempted in the future. The ability to steal virtual currency worth millions of dollars while sitting behind a monitor is too much to pass up.
It’s bad enough that normal criminals are trying to hack exchanges, but you now have rogue states like North Korea looking to supplement their revenue by attacking exchanges as well. Better keep an eye on how you store your cryptocurrency.
Do you think more exchanges will be hacked in the near future? What are you doing to protect your assets? Let us know in the comments below.
Images courtesy of Pixabay and Bitcoinist archives.
