Coincheck - The Most Elaborate Cryptocurrency Scam in History Resulting in A $530 Million Loss

The company had to go through a lot during this challenging time, like halting its operations and modifying its entire customer-facing application portfolio. Also, to avoid such storms striking ever again in the future, they had to develop strategies that could help save the machine data.

Have you ever heard of the company Coin Check? You probably would have if you are a cryptocurrency fan and are interested in money or digital currencies. In simple words, it deals with bitcoin and cryptocurrency exchange in Japan. Unfortunately, they became the victim of one of the worst cyberattacks. It is said to be one of the most significant losses experienced by the cryptocurrency market, and this article you are about to read is all about it! 

The company had to go through a lot during this challenging time, like halting its operations and modifying its entire customer-facing application portfolio. Also, to avoid such storms striking ever again in the future, they had to develop strategies that could help save the machine data. Thus, it wasn’t too long before they came up with their newly-revamped applications, which helped organize raw data and introduce timely alerts.

Nevertheless, daily analysis of data proved to be a success in mitigating the chances of potential attacks and raised the bars of security alerts. Now, what exactly was the Scam Case, and how did it happen in the first place? Let’s find it below.

forex setup

If you are someone who’s interested in Cryptocurrency, then you’re definitely at the right place. We can give you the best practices in identifying red flags as well as help you in recovering your stolen money from scammers!

Table of Contents

The Contemporary Digital Monetary Mechanisms Cause a Spike in Cryptocurrency Scams

forex setup

Now, you may find it attractive to invest in the new digital monetary mechanisms known as a cryptocurrency because who would want to miss a chance of getting extremely rich? However, one should know that yes, they come with benefits but at the same time with a significant risk of forgery and hacking too. Shedding some light on cryptocurrency itself, it is different from a credit card or other methods. Firstly, payments made through it are not reversible. Once you have paid, the amount has gone. Therefore, before you make the payment, it is essential to research the seller as much as possible. Where he is located, his contact, and especially the customer reviews!!

Moreover, no matter how much you try to protect yourself, some information about your transaction will always be public. Transaction details are recorded on a ‘blockchain,’ a general list of all receipts and payments. It could include your address which can be used to identify you in the future. Thus, when investing, you need to confirm they’re blockchain. Cryptocurrency is the future! And scams are literally everywhere online, even if it’s a cryptocurrency scam. In fact, in the first nine months of 2021, there was a loss of around £146 to the fraud.

forex chart on phone

Detecting if it’s a crypto scam is not so hard. For example, know that it’s a scam if someone says you have to pay by cryptocurrency. Basically, the principle behind such scams is to gain individual private information such as security codes or manipulate someone to send cryptocurrency to a digital wallet. People often become victims on social media if they see a tweet or text that says to send cryptocurrency. It is even posted by celebrities and the people you follow, which makes you think it’s true when in reality, their accounts have been hacked! When you pay through a gift card or wire transfer, are there any chances of getting your money back? No, right? The same happens when it comes to cryptocurrencies! So many criminal activities happening worldwide are a result of cryptocurrencies. In another case, about $630 million bitcoins were lost to hackers.

The Events That Led To a $530 Million Loss

low chart

Let’s dive into the history of one of the biggest cryptocurrency exchange and digital wallet companies, Coin Check. Based in Tokyo, the company was founded in 2012 but launched the cryptocurrency exchange in 2014 with the motive to pay more conveniently and comfortably. It has its headquarters located in the Shibuya district, famous for startups. Their team is public, with a skilled and experienced CEO and other members to see online. The service of allowing everyone to trade and pay virtually gained popularity instantly. In late 2017’s, the company experienced significant growth in its virtual currency business, perhaps due to the adequate regular checks on their performance and capabilities. Unfortunately, the company remained consistent for a short time, but it was not long before it became evident when a security breach resulted in losing $530 million in NEM virtual currency tokens in 2018.

You may be wondering, what is NEM? It is a type of cryptocurrency that stands for New Economy Movement and, as a digital coin, markets itself for fast global transactions. Its developers once said that these coins hold so much power that they can make the rich richer. It quickly became one the most disastrous events in history, and in its response, they took a lot of measures. These included introducing improvements in management and internal controls of the company and redesigning the customer-facing application portfolio. Nevertheless, this scam raised many questions about security and regulatory protection in the growing digital assets market. Therefore, in terms of ownership and the overall reputation of Coincheck, the company has suffered a lot.


If you have suspicions of a scam or phishing attack, you can rely on experts to help you with protection, mitigation, and fund recovery. You will feel safe knowing that experts with years of experience will be guiding you!

Cryptocurrency NEM aims to tackle all business data digitally, but they, unfortunately, fell by 20%, which was near to 85 cents.

forex money

It was 02:57 on a Friday, January 26 (17:57 GMT Thursday), hackers broke in, but the scam was discovered nearly eight hours later at 11:25. The hacker had sent emails with fake pre-ICO sale announcements of tokens to the users. The email was sent on January 26, whereas the actual expertly ICO was slated on January 31. Coincheck started investigating whether the fraud had been launched from Japan and how many customers were affected when they noticed an abnormal decrease in the balance. They instantly reported the incident to police and Japan’s Financial Services Agency and froze most of its deposits, withdrawals, and other services. There was an involvement of 523 million tokens of a cryptocurrency named ‘NEM,’ which belonged to Coincheck customers.

Cryptocurrency NEM aims to tackle all business data digitally, but they, unfortunately, fell by 20%, which was near to 85 cents. Later, MtGox found 200.00 bitcoins in an old digital wallet. That was the day when the trading world changed utterly. It affected about 260000 users around the globe. According to executives, this might have been the consequence of computer hacking or an inside job, but they have never clearly disclosed it. Although they owned up to their security issues, they kept customer assets in a ‘hot wallet’ connected to external networks. A hot wallet is a method to store whatever relates to the internet, making it more vulnerable to hacking. It is said that it is similar to carrying large amounts in person. Therefore, they should have been placed in a ‘cold wallet’ instead of a tiny device and can be stored offline.

man checking the forex chart

When the company president confronted this, he replied that it was due to technical difficulties and staff shortage. Also, they lacked multi-signature security, which could have helped prevent the scam as it requires multiple signs off before the funds could be moved. One of the strangest things about the scam was that some people wondered where did the coins go? The answer was that even if they were stolen, they could be seen simply because they were public. Woah! The company has published eleven addresses where all 523 million stolen coins ended. You can even search and see them for yourself! However, the real problem is that no one knows who owns those accounts, as every version has been labeled with a tag that reads ‘owner_of_this_account_is_hacker.’  According to the NEM foundation operating in Singapore, they had a complete account of Coincheck’s hacked NEM to which they reported that the hacker had not moved any of the funds.

Hence, later, the company developed a tool that would automatically reject stolen funds. In addition to this, the market value of NEM fell by 11% over 24 hours. It is hard to believe, but all the money was lost to the hackers. The scam affected other companies so much that a cryptocurrency-lending scheme named ‘bitconnect’ shut down its operations and disappeared. This exit scam led to a loss of around $250 million. It is important to note that Coincheck announced that all those affected were to be repaid in Japanese Yen through the coin check wallet. The financial services agency ordered Coin Check to develop an entire plan of helping customers and improvements to its security.

If you’ve been a victim of a crypto currency scam, then consult with us to help you get your account data and stolen money!

Crypto Scams Can Be Avoided


Thus, considering the biggest scam mentioned above, we recommend keeping the money only needed for upcoming transactions in the hot wallet. Also, transactions could be done publicly amongst the local crypto community members. Moreover, maintaining the assets in software wallets such as mobile and desktop is recommended. Not to ignore, printing out the private keys for your coins on paper could be a great way too! If we look at the situation currently, some countries like China have tried to ban trading in cryptocurrencies. On the other hand, Japan has taken a lighter approach as the government started licensing the exchanges.

This is why so many sources still claim that Coincheck is a safe choice as these licenses that Japan issues are strict. Nevertheless, it may seem impossible to halt scams altogether, but a balancing approach through effective regulations and tight security could mitigate the chances of scams occurring in the first place. Taking measures and looking for particular claims could help you figure out who to avoid. For example, scammers are experts at making big claims with no details or explanation. You should know that intelligent people in business require detailed information to understand where they are putting their money which requires investment advisors to share their knowledge.

red X

If they don’t, it is evident that it’s a scam. Business plans for the future and their rules and regulations need to be highly considered. It is essential to know that the company you are investing in has real people behind it. Also, it is not guaranteed if you will make money or profit from cryptocurrency investment. Thus, if someone promises you this too, it is a scam. Do not even trust a celebrity testimonial because those can be easily faked in such a case. Therefore, remain alert, and before you invest, carry out thorough research.

Perhaps, looking for reviews, scams, and complaints could prove helpful. It is always beneficial to know what others are saying! Suppose you are individual thinking of investing in cryptocurrencies; research how to remain safe from phishing attacks before investing. One should always look out for grammatical errors and spelling mistakes because actual companies do not have any. Companies use a single domain for their URLs and email, so taking a close look when checking email’s legitimacy could be helpful. Lastly, if it seems suspicious, it probably is. Watch out!

Bounce Back From a Cryptocurrency Scam - Recover Your Amount Now!

Have you, your business, or your client lost cryptocurrency due to a scam attack? If yes, come to us at Chargebackway, even if you think your case is ‘small’ because these ‘small’ losses can add up to a significant number damaging the whole industry to a great degree. Chargebackway’s team specializes in carrying out extensive and complex investigations. We develop unique software that identifies links between cryptocurrency addresses and entities with our comprehensive and integrative recovery process.

Our intelligence team creates effective documents and reports that have been proven and utilized in judicial proceedings in the past. We can be of great help in court too! Also, our security team specializes in detecting malicious message transmission. Lastly, with the help of third parties such as police or financial services agencies, we make sure to help you recover your cryptocurrencies. Crypto scams are indeed endless. We know that they make you extremely rich, but you cannot ignore the severe consequences that come with it; fraud. Thus, we at Chargebackway encourage every business, big or small, to come to us if they have been scammed or are in a situation similar to the Coin Check. We also guide where to get help and how to protect yourself from scams. Visit our website and spread the word to your loved ones to keep them safe in this emerging market before beginning your crypto investment!

We Can Help You

Victims of scams are stressed out because they don’t know what to do. We have the tools and experience to fight off scams, and our team can help you in getting your money back.

Please fill up the form now so that our team will get in touch with you.