Coincheck to Compensate Users, Resume Operations ‘Next Week’

Embattled cryptocurrency exchange Coincheck said that it will resume operations next week and immediately begin compensating users who lost funds when hackers stole $530 million worth of NEM tokens (XEM) from the exchange in January.

On Thursday, the Tokyo-based Coincheck published a statement outlining its plan to compensate the approximately 260,000 users affected by the hack and improve its security policies in advance of reopening its trading platform.

The exchange operator said that it will credit users who lost XEM during the hack with approximately 89 JPY (~$0.83) per token. Though somewhat less than XEM’s fiat value at the time of the hack, this is more than double its present value — $0.36, according to the BlockExplorer Price Index. As a result, NEM investors can repurchase their lost tokens and still have a tidy sum left over.

Coincheck also explained its plans to overhaul its security policies, which Japan’s Financial Services Agency (FSA) found to be woefully inadequate in the wake of the hack. The exchange said that it has hired new personnel to address cybersecurity threats and has also implemented the necessary measures to store most of its funds in cold wallets. As BlockExplorer reported, the exchange had inexplicably stored the majority of its funds in internet-connected hot wallets prior to the hack, which is why the hackers were able to make off with so large a sum.

Having put these measures in place, Coincheck intends to resume service next week. At present, it is only operating in a limited capacity — many of its functions, including new user registrations, remain closed.

“We will continue to do our utmost to resume the paused service and thoroughly implement the measures to prevent recurrence so as not to cause such a situation again, so that customers can use the service with confidence,” Coincheck CEO Koichi Wada said in the statement, according to a rough translation.

However, it is unclear whether Wada will remain in charge of Coincheck moving forward. According to a report from the Japan Times, the FSA has ordered the company to “conduct a drastic review on its management team,” and Wada has hinted that he might step down from his post.

David Murray

David has been following the development of cryptocurrency technology for several years, and he is optimistic about its potential to democratize the financial system.

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