NEM Foundation Stops Tracking Coins Stolen from Coincheck

The NEM Foundation has announced it will no longer track cryptos stolen from the Japanese exchange Coincheck. The Singapore-based organization said it had provided law-enforcement agencies with information from its investigations. It did not explain its decision to end the tracking efforts. According to some estimates, half of the NEM coins that disappeared in the hack have been laundered on the darknet.   

Also read: Coincheck Drops Anonymous Monero, Dash, Zcash

Tracking Provided “Actionable” Data

The NEM.io Foundation, created to promote the NEM cryptocurrency (XEM), has stopped tracking the coins stolen in the Coincheck hack. The Japanese exchange lost some ¥58 billion worth of NEM (~$550 million USD) in January, when it was attacked by hackers. The Singapore-based foundation developed a special technology to identify the accounts the cryptocurrency was sent to.

On Tuesday, the NEM foundation said its efforts have provided some “actionable information” to law-enforcement authorities, the Japan News reported. However, the organization did not reveal any more details about the reasons behind its decision to stop further tracking.

Recent reports suggest that a lot if the missing XEM cryptos are probably lost forever. A cybersecurity expert told the Japan Times the hackers may have converted up to half of the snatched coins into other cryptocurrency or even fiat money. Masanori Kusunoki, Chief Technology Officer at Japan Digital Design, claims they have been laundered through a website existing on the darknet.

Kusunoki also thinks the site is still being used to process transactions. He believes it’s getting harder to trace these transfers and track the stolen coins. A week after the hack the NEM Foundation said no attempts had been made to trade the cryptos on other exchanges.

In Recovery Mode

For weeks, Coincheck has been trying to recover from one of the biggest hacker attacks. The Japanese exchange has already refunded ¥46.6 billion ($440 million) to compensate about 260,000 of its customers who lost NEM funds. It has also prepared a set of measures to improve its security, informing authorities about its plans in that direction.

The trading platform filed an application with Japan’s Financial Services Agency (FSA) in September to register under the revised legislation regulating payment services in the country. Its registration has been postponed by the attack in January, but also by Coincheck’s policies allowing customers to remain anonymous.

Japanese media reported this week that the exchange was expected to discontinue support for three cryptocurrencies providing high levels of anonymity – Monero, Dash and Zcash. According to Japan Times, the exchange has recognized the risks posed by these cryptos that can potentially facilitate money laundering. Identifying the recipients of funds transferred on their blockchains is proving impossible.

Coincheck resumed trading on Monday. Customers cannot purchase XMR, ZEC, and DASH, but the platform may offer them to sell their coins at a fixed rate.

Do you think the stolen NEM coins will be found and returned? Share your expectations in the comments section below.

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