White Hat Hackers Join Tracking Efforts for Stolen Coincheck Funds

‘White hat’ hackers are teaming up to add their expertise in the ongoing search for the stolen $530 million worth of NEM from crypto exchange Coincheck.

Last month, Tokyo-based Coincheck became the victim of hackers after they were able to steal millions of dollars’ worth in cryptocurrency, making it the biggest theft of its kind. Yet, while the identities of those behind the hack are not known, white hat hackers are playing an important role in tracking the funds.

As a result, a growing number of computer whiz kids are joining efforts to track the funds activities, reports the Nikkei Asian Review.

For many, such as Shota Hamabe, a 34-year-old programmer for an information technology company, it is these types of situations that paint a bad picture of the industry. Hamabe, who is tracking the stolen NEM, said:

The incident has created a negative image of virtual currencies, but I believe they can make a huge difference in the way we transmit data and handle business.

According to the report, those involved in the Coincheck hack have sent NEM to over 400 accounts. This is reportedly an attempt to complicate tracking efforts. Around nine billion yen worth of NEM is believed to have been exchanged for cryptocurrencies such as bitcoin through the dark web.

Notably, NEM has a unique feature attached to it that is enabling ethical hackers to track the stolen funds. A sender of NEM can attach markers, known as mosaics, to a receiver’s account. This is something that bitcoin doesn’t have. The white hat hackers are simply sending small amounts of NEM in order to mark accounts where stolen funds have moved. They are then able to track whenever NEM has been transferred from the marked account to another account. However, while this is making it possible to track the stolen currency it doesn’t inform those following the money who owns the third account.

Following the hack, Japan’s Financial Services Agency (FSA) has called for all digital currency exchanges to be inspected to ensure they have the right protocols in place for consumer protection. It was deemed by Taro Aso, the Financial Services Minister, that the 15 exchanges waiting for certification would require further onsite inspections.

Earlier this week it was reported that Japanese crypto exchange Zaif, a government-registered exchange run by Osaka-based Tech Bureau Corp, had suffered a system glitch. Consequently, over a 20-minute period seven traders were able to purchase bitcoin for free; however, none were able to profit from it.

Featured image from Shutterstock.

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