One of the main problems around cryptocurrency is that it makes money laundering much easier. What is more disturbing is that crypto-exchanges are fairly ill-equipped to combat these issues. The recent Coincheck hack highlights money laundering potential of the digital currency.
When Coincheck was hacked earlier this year, over $500 million got stolen in NEM. It is still not known who did the hack, and reportedly some of the stolen cryptocurrency has already been laundered. Most of the NEM Foundations, as well as crypto-exchanges, keep a close tab on where the stolen funds are going. In theory, this should have prevented the hackers from laundering the money. However, in practice, things generally turn out differently.
Despite all the flagged addresses, around $80 million of the stolen NEM has already been laundered. Since only a few exchanges deal in NEM to BTC conversion, it is most likely that the darknet was used to funnel the stolen funds.
The Coincheck hack is still one of the greatest financial disasters in the crypto-industry and a mystery that remains unsolved. Around 100 policemen have been appointed by the Tokyo Metropolitan Police Department to look into the matter. A multitude of ethical hackers has also volunteered to provide their assistance.
Now Coincheck cannot be totally blamed for the security flaws which allowed the hack. In fact, many more exchanges have been victims to hackers – this one just happens to be the largest hack done to date. So it is a point of fact that crypto exchanges have security flaws and we must come to a solution for the present situation, or the matters will keep on escalating in the future.
Obviously, punishment to the hackers will lead to a reduction of such crimes, but as of now, there are no means for law enforcement to track down crypto transactions as efficiently as the hackers are making the crypto transactions.
Meanwhile, there are some good news for Coincheck users who lost their funds in the hack. Apparently, the exchange will fully reimburse their customers with three times the current NEM prices. Coincheck will also resume normal trading activities later this year. The only question that remains is, are the hackers coming back too?