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Coincheck hackers move cryptocurrency to stymie recovery

Funds tracked to about 20 wallets, potentially involving innocent holders

Exchange rates including XEM -- the unit of the NEM currency stolen from Coincheck   © AP

TOKYO -- The 58 billion yen ($532 million) worth of NEM digital currency recently stolen from a Tokyo exchange has been shifted to about 20 different accounts, in what experts see as an attempt to disrupt recovery efforts.

The account to which the money was initially transferred is being monitored, likely prompting the hackers to try to spread the funds around as quickly as possible. The NEM Foundation, the international group that manages and promotes the currency, on Wednesday confirmed it had spotted movement into multiple accounts. 

Coincheck, the operator of the hacked exchange, intends to ask the account holders to return the currency. But the more the money moves, the harder it will be to get it back.

The hackers extracted the funds into the initial account last Friday, then transferred some of it into several other accounts. 

Late on Tuesday, money was again shifted from the initial account into nine other unidentified accounts in 14 relatively small transfers. These transactions amounted to only 1,100 XEM -- the unit of NEM -- compared with the 520 million XEM the hackers snatched. It took only about 30 minutes to make the transfers.

This brought the total number of accounts involved to around 20. An official of a virtual currency exchange operator believes the recent moves are aimed at "disrupting the supervision system."

The official speculated that Tuesday's transfers involved "mainly accounts that have had some interaction with [the hackers' original] account since the incident, such as sending NEM" even out of curiosity. This leaves open the possibility that the holders of the new accounts may be unrelated to the original account owner. 

While accounts known to be linked to the hackers have been tagged, involving other account owners would expand the scope of the monitoring significantly, potentially dashing Coincheck's hopes of finding the lost money.  

Yusuke Otsuka, Coincheck's chief operating officer, told reporters last Friday that the company would "try to halt the selling and buying of the stolen NEM in cooperation with exchanges in Japan and abroad."

This could prove complicated, though, especially if the owners of the additional accounts have no connection to the hackers. They would be shut out of trading through no fault of their own, potentially sparking a backlash. 

Though its monitors have tracked the transfers, the NEM foundation said it could not determine whether any funds had been brought to an exchange. It did say it would be difficult to convert the stolen money into cash.

A NEM programmer and other experts are urging account holders not to touch funds that appear in their digital wallets unexpectedly.

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