What Coincheck theft taught me

On 26th January, one of the major cryptocurrency exchanges Coincheck was hacked and NEM almost worth of $400 million was stolen. At late night on the same day, Coincheck had a press conference to make a public statement. I had some NEM in Coincheck so the news really shocked me. During the press conference, the CEO Wada and another board member Otsuka couldn’t answer most of the questions by the press especially about how to compensate the customers who lost their NEM. I was one of them and felt really worried if I can ever get my money back. A few days later, the company announced that they will pay back JPY at a rate of 88.549 yen (82 U.S. cents) per NEM. That means some NEM holders were forced to exchange NEM at a low rate.

It was a good lesson for both investors and cryptocurrency exchanges. I learned that I should keep my cryptocurrencies in hard wallet and investing in something that’s new and not regulated enough by authority can be risky(although it can also be high-rewarding). However, what really got me through this theft is that I realized there are people who around my age dealing with billions of billions money and shifting the world toward the new phase through new business. The CEO Wada is only 27 and running the company which deals with tons of money. I’m quite surprised. This is the world of startup. Although, of course you cannot ignore the fact that he had no idea how to handle the crisis partly because he lacked the business experience.

Also the speed of the decision making. The money stolen was staggering $400 million. However, only a few days later they made a decision to compensate all the victims of the theft. If this was the government or a major corporation, it would have taken much more time, which would frustrate people more and make the situation worse. Whether repaying at ¥88 is right or not is left to be debated, however, the speed of the decision making is something we can learn.

Some Japanese expressed that they are okay with the compensation plan of the Coincheck while others call them crazy. To be honest, the plan is not satisfying to me and the best(and ideal) way is to give all the NEM back to the holders. This seems very difficult. Part of the reason why some were not too furious about their plan was maybe they have some hope Wada will come back and restart expanding the market more or simply didn’t lose so much money.

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