Two men suspected of buying XEM tokens stolen in the 2018 hack on the Coincheck exchange have been arrested in Tokyo. According to the Japanese Times, the pair were held after being found to be in possession of XEM tokens they knew derived from the hack which saw $530 million worth of XEM tokens stolen.
Pair Sold Stolen Tokens on Exchanges
The arrests of Takayoshi Doi, a doctor, and an executive named Masaki Kitamoto are the first associated with the January 26, 2018, hack, which saw 500 million XEM tokens stolen from Coincheck.
The pair have not been accused of taking part in the hack but instead of buying the stolen XEM tokens on the dark web for a fraction of their exchange price and then selling them on exchanges.
According to reports, Kitamoto has already admitted his guilt and said he made some $19 million from trading the stolen tokens, with investigators hoping that combing through the pair’s transaction history will throw up more leads in terms of who actually hacked into the exchange.
Japanese Regulations Tightened
Following the hack in 2018, Coincheck were forced to admit that they stored all of their XEM tokens in a single hot wallet and did not use the NEM multi-signature contract security recommended by NEM developers. They also admitted they were not registered with the Japanese regulatory authorities, which prompted a crackdown on crypto exchanges by those same regulatory bodies.
Initially, NEM developers had been confident that they would be able to track the stolen funds using, but had to abandon this practice after the hackers sold the tokens on the dark web in exchange for Bitcoin and Litecoin to the likes of Doi and Kitamoto.
Investigators managed to track some of the stolen XEM tokens to a legitimate exchange, with the identities of those account holders, Doi and Kitamoto, provided to police last November,
The Blockchain Never Forgets
Following the arrests of Dio and Kitamoto, anyone who bought XEM tokens from the dark web for resale on exchanges are likely looking over their shoulder now, having previously assumed they had gotten away with it. After all, the blockchain never forgets.