In some ways, Coincheck’s story has been just like every other crypto exchange that endured a hack, scandal, and commensurate repercussions. The list of exchanges that have been compromised at one point is sizable, and it includes Mt. Gox., Binance, Bitfinex, and others. Coincheck has good company.
The story is familiar. A technical oversight allowed outside intruders to steal millions worth of digital currency. In Coincheck’s case, hackers stole 523 million coins of NEM’s digital currency. The total loss exceeded $400 million and impacted 260,000 Coincheck users.
At this point, Coincheck’s story begins to diverge from the others.
Coincheck immediately accepted full responsibility for the loss, and they set out to do something about it. The exchange halted its operations, and they went to work fixing the problems.
What’s more, they put their money where their mouth is. Last month, Coincheck allotted $435 million to compensate users for their losses from the hack.
Operating in a limited capacity, the platform resumed operations in March. However, their future was still uncertain. After all, a system hack of this scale hardly creates a compelling marketing campaign.
A Saving Grace
Fortunately for Coincheck, Reuters reports that Monex will buy Coinecheck for 3.6 billion yen ($34 million USD).
The Asian Review published some of the conditions including a management reshuffling that will see Coincheck’s founding president Koichiro Wada and COO Yusuku Otsuka leave their positions. Monex COO, Toshihiko Katsuya, will become the new president of the company.
The Next Steps
Monex intends to revamp Coincheck’s operations so that they platform can return to full services. They might have an uphill battle. In addition to restoring public confidence in the platform, Coincheck and other cryptocurrency exchanges operating in Japan are facing increasing regulatory scrutiny from the Japanese Government.
Coincheck still has a pending application with Japanese regulatory bodies that must be approved before it can resume normal operations.
The news had an interesting impact on Monex shares.
When talks of the merger began to spread, their stock rose by 23%.
However, by the next days, those shares had decreased by almost 10%. In this way, Monex got a small taste of the markets that they will soon be inhabiting.
If they are successful, Monex and Coincheck will prove to the be the exception to the rule. When Mt. Gox endured a similar hack, their company immediately folded, and their leadership and actions have been widely criticized by investors, experts, and pundits.
In statements explaining their business philosophy, Monex explains that their name and their philosophy pushes them to on the forefront of the financial industry. By wading into crypto markets, they are getting exactly what they planned for.
Cover Photo by Benjamin Hung on Unsplash