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Japanese government investigating after $530 million stolen in largest cryptocurrency hack ever

Coincheck President Koichiro Wada (left) attends a news conference in Tokyo. Japan's government said Monday it would impose administrative measures on virtual currency exchange Coincheck after hackers stole hundreds of millions of dollars in digital assets from the Tokyo-based firm. (AFP/Getty Images)

The Japanese government is investigating a massive hack that was revealed this weekend, which resulted in the theft of around $530 million worth of cryptocurrency from the Japanese cryptocurrency exchange, Coincheck.

What happened?

It's unclear exactly when the hack occurred, but the company revealed it in a blog post over the weekend. It is believed that the hack affected more than 260,000 users who had their cryptocurrency stored at the exchange, and that the value of the cryptocurrency taken was over $530 million at the time of the hack.

If these figures are accurate, that would make the theft the largest cryptocurrency heist in history, far larger than the $400 million theft from Mt. Gox in 2014.

According to CNN, the Japanese government has responded swiftly to the theft, launching an investigation of the hack itself. The Japanese government has already indicated that it will be asking Coincheck to improve its security and business practices, and will further be "supervising" Coincheck's restitution to its customers.

Coincheck also announced in response to the hack that it will suspend trading of all cryptocurrency, except for Bitcoin, while the investigation continues.

Will customers get their money back?

Some, but not all, of the money will be refunded. Hopefully.

According to Coincheck's blog post, Coincheck will be refunding users about 80 percent of the value of their cryptocurrency, or a total of $426 million.

Coincheck did not respond to repeated requests for comment from CNN about when customers could expect their refunds, or how it planned to obtain the money to fund these refunds.

As the value of tradeable cryptocurrency has exploded in recent months, theft via hacking has become increasingly prevalent. Numerous cryptocurrency companies, including South Korean company Youbit and Slovenian company NiceHash, have been successfully targeted by hackers just in the last month. Security concerns continue to threaten the long-term value of cryptocurrency, as its skyrocketing value continues to make exchanges enticing targets for hackers.

Since many cryptocurrency exchanges are not regulated and/or insured by governments, cryptocurrency investors are sure to watch Coincheck's response to this theft to determine whether even large exchanges are able to insure their investors against loss due to theft.

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