Watch Out! Analyst Says More Crypto Exchange Hacks Coming

The Coincheck exchange hack sent shockwaves through the crypto community, and analyst Nicholas Colas says to expect more such hacks in the future.

The hack of the Japan-based Coincheck crypto exchange last week was huge. Roughly 523 million of its NEM coins were stolen, causing the exchange to shut down all withdrawals, except for Bitcoin. The overall value of the stolen coins is around $534 million. However, the crypto market stabilized pretty quickly, but more trouble may be coming. In an interview with CNBC, analyst Nicholas Colas said that more exchange hacks will happen.

Hundreds of Millions Stolen

The Coincheck hack does have some silver linings. First, the exchange is planning on reimbursing the 260,000 accounts affected by a total of $425 million. This accounts for 90% of the stolen funds, which is not too shabby in lieu of the alternative.

Secondly, the Japanese Financial Services Agency (FSA) doled out its punishment to Coincheck, but it was not as severe as had been feared. Basically, the exchange has to fully explain the circumstances of the hack and institute a series of upgrades to prevent “similar events in the future.”

Of the attack, Nicholas Colas, the co-founder of DataTrek Research, told CNBC:

I think [the attack] does highlight the fact that the industry still has a long way to go in terms of basic issues of security. This is certainly not the first, nor will it be the last, such hack attack on cryptocurrencies and, all things considered, I think they’re taking it fairly well in terms of price.

Bracing for More Hacks

Nicholas Colas explained that Coincheck keeping so much of their assets in a hot wallet was not a good idea. He went on to say:

Keeping 100 percent of your crypto assets online is a bad idea for an institution, or frankly, for an individual who has a large amount invested in it as well.


Read Full: Watch Out! Analyst Says More Crypto Exchange Hacks Coming