According to Kyodo News of 17th March 2018, it is believed that hackers could have exchanged some of the NEM Cryptocurrency that was taken from Coincheck Inc, which was a bourse operator based in Tokyo. They switched their loot into other virtual coins for laundering as stated by a cybersecurity expert earlier.
The converted coins could then have been exchanged with other currencies to lose their trail or cashed by the hackers through the ‘dark web’ that is highly anonymous. All these cryptic transactions make it quite difficult to track the stolen coins that are reported to be worth $547 million (58 billion yen) at the time of this heist.
Hackers got away with almost $530 millions worth of NEM coins on January 26 from Coincheck, the biggest Japanese Cryptocurrency exchange. They moved the coins to many addresses as confirmed on Jan 30 by Jeff McDonald, the NEM Foundation vice president. According to Reuters, NEM detected that the hackers sent transactions of 100 NEM coins that were worth $83 each at the time.
These hackers sent the small amounts to many addresses enabling them to avoid the activation of anti-money laundering mechanisms against their transactions. Initially, the hackers did not attempt to liquidate through Cryptocurrency exchanges. Several transactions from one hacker account showed the movement of coins to haphazard accounts. They sold nothing during that period and they also did not attempt to make any transactions with Cryptocurrency exchanges.
The company has promised to compensate all losers affected by this hack since up to today none of the hackers have been caught. The latest reports of the dark web transactions prove that efforts to regain the lost coins in the last seven weeks have been futile.
Dark Web Trading
The hackers prepared adequately by setting up a website hosted on the dark web used predominantly for trading coins. The analysis shows that they began exchanging the NEM coins on February 7. According to the experts, transactions are still being made on the website at the time of writing. This fact suggests that more of the NEM Cryptocurrency could be laundered and soon become impossible to trace.
The NEM Foundation, which is a Singapore-based organization that promotes the virtual currency, has been actively involved in the tracking of the stolen NEM by marking all the accounts that were used for illicit transfers. They have voiced their concerns and appealed to all virtual currency exchanges worldwide not to process any NEM payments emanating from the marked accounts.
However, there have been several cases where it was reported that such marks got erased and successfully exchanged conducted. Some of the exchange operators were also alerted by an upsurge of NEM trading prompting them to block suspicious transactions. But, the individuals possessing the NEM linked to the marked accounts just take their heist elsewhere as the report stated.
Masanori Kusunoki, the Japan Digital Design Inc. Chief Technology Officer, confirmed that it has become evident that it is impossible to block currency laundering on the basis that all transactions got recorded. He recommended that exchange operators need to make prior arrangements and agreements on how to handle stolen virtual coins.
These hackers managed to steal the NEM currency from Coincheck Inc. In late January in the most massive recorded digital currency heist in history. That surpassed the 2014 Mt. Gox scandal, which involved theft of Bitcoin worth around 48 billion yen.