One of Japan’s largest digital currency exchanges, Coincheck, has fallen victim to a large scale cyberattack. Over 260,000 customers were affected by the hack on Friday January 26, in which £380 million worth of virtual assets were lost.

The Tokyo-based company has agreed to reimburse customers by up to 90% of their investments.

Coincheck’s Response

When the security breach was detected on Friday, Coincheck suspended trading on all cryptocurrencies except Bitcoin. As of Tuesday January 30, registrations with exchanges remain suspended until further notice.

According to Coincheck, hackers broke in at approximately 17:57 (GMT) – However a period of eight hours passed between the initial intrusion and Coincheck reacting to the hack. Upon discovering the scale of the breach, the company contacted the police and Japan’s Financial Services Agency.

Despite the response time, the company is confident that they can track the lost assets and offer customers reimbursement.

In a statement, Chief Operating Officer, Yusuke Otsuka said: “We know where the funds were sent. We are tracing them and if we’re able to continue tracking, it may be possible to recover them.”

Significant Losses

Over 10,000 Japanese businesses accept various forms of cryptocurrency for online purchases, and with such a significant breach of security and financial losses, this could irrevocably damage consumer confidence. In addition to this, with only 90% of funds being reimbursed, there will be many who lose part of their investment.

NEM is the tenth-largest cryptocurrency based on market value, however in the wake of the breach its value plummeted by 11% over a 24-hour period; and it was not the only cryptocurrency to feel the pinch. Bitcoin dropped by 3.4% and Ripple by 9.9%.

An Isolated Incident?

This event is one of a number of high profile cyber security breaches in recent years. The most infamous in 2014, when digital exchange MTGox fell victim to a catastrophic breach which saw hackers skim 850,000 Bitcoins over an extended period.

At the time, this amounted to over $450 million; in today’s market that’s over $9 billion.

After the 2014 breach, Japan introduced a licensing system to ensure that digital currency exchanges – such as Coincheck – are monitored.