This week, $534 mln worth of NEM was stolen from Biggest Japanese cryptocurrency exchange Coincheck. After the hacking invasion was announced, developers behind NEM created an automated tagging system to locate the funds taken by hackers.
In this massive hacking attack almost $534 million price of NEM were stolen from low security budget that lacked multi-signature security measures. Coincheck professionals stated that all of the money were stored in a wallet or a web based wallet, which kept user funds susceptible to the security breach.
Soon after the press conferencen, NEM representatives and its own open-source development community firmly opposed the thought of conducting a hard fork to prevent user funds on a centralized cryptocurrency exchange from being retrieved.
A hard fork might have been occurred if $534 million in NEM were taken because of the mistake of the NEM blockchain. But because the security breach was triggered by the lack of strong security procedures of Coincheck, the NEM development team refused to perform a hard fork.
Instead, the NEM development team created an automated tagging system to ensure that funds taken from Coincheck are traced. By tagging taken cash as stolen money, cryptocurrency exchanges is now able to easily validate if taken NEM cash are withdrawn or deposited to any Cryptocurrency trading platforms.
" NEM is creating an programmed tagging system that'll be ready in 24-48 time. This automated system will follow the money and tag any account that receives stolen money. NEM has already shown exchanges how to check if a merchant account has been tagged. So the good news is the amount of money that was hacked via exchanges can't leave," said NEM spokesperson.
During an interview, NEM Vice president Jeff McDonald established the development of the tagging system and the work NEM Basis will lead in the next few weeks to prevent stolen money from being cashed out or converted to other cryptocurrencies through trading Platforms.
At that time it is very difficult for the hackers behind the Coincheck hacking to convert the stolen NEM to other major cryptocurrencies like bitcoin and Ethereum because the robotic tagging system will immediately alert exchanges about the stolen funds.
Because of the huge amount of the stolen funds, additionally it is inconvenient for hackers to go through small-scale cryptocurrency exchanges to convert the stolen funds.
At this time, the one safe option for the hackers is to hold onto the stolen NEM. Because it has become significantly difficult for the hackers to do anything with the cash. It isn't possible for the hackers to cash out the stolen NEM to fiat currencies like the US dollar and it is also extremely hard to convert the stolen cash to other cryptocurrencies.