One of Japan's largest digital currency exchanges says it is going to repay hundreds of millions of dollars' worth of virtual money after hackers broke into its network.

Key points: Hackers stole a reported $660 million worth of cryptocurrency NEM from Coincheck

Hackers stole a reported $660 million worth of cryptocurrency NEM from Coincheck Coincheck says it will return most of it to investors

Coincheck says it will return most of it to investors Japanese financial watchdog has warned of further possible attacks

On Friday Coincheck exchange said on its website it had halted sales and withdrawals of a cryptocurrency called NEM after hackers stole a reported 58 billion yen ($660 million).

On Sunday, the exchange announced it would return about 46.3 billion yen ($523 million) to investors, but was still working on the timing and method.

The initial theft was reportedly as one of the world's biggest-ever digital cryptocurrency thefts.

The reported loss tops the 48 billion yen the Japan-based Mt Gox Bitcoin exchange lost in 2014.

Coincheck president Koichiro Wada apologised at a news conference and said the company may seek financial assistance.

"Some parts of our service were suspended today [on Sunday]. I deeply apologise for your inconvenience because of this incident. I am very sorry," he said.

Chief operating officer Yusuke Otsuka said stolen funds were kept in a "hot wallet" — one connected to the internet instead of being secured offline, according to Forbes.

Asked why, company President Koichiro Wada cited technical difficulties and a shortage of staff capable of dealing with them.

Further cyber-attacks possible regulators say

Reuters reported two sources with direct knowledge of the matter said Japan's Financial Services Agency (FSA) sent a notice to the country's roughly 30 firms that operate virtual currency exchanges to warn of further possible cyber-attacks, urging them to step up security.

The financial watchdog is also considering administrative punishment for Coincheck under the financial settlements law, one of the sources said.

The theft underscores security and regulatory concerns about bitcoin and other virtual currencies even as a global boom in them shows little signs of fizzling.

World leaders meeting in Davos last week issued fresh warnings about the dangers of cryptocurrencies, with US Treasury Secretary Steven Mnuchin relating Washington's concern about the money being used for illicit activity.

What is NEM?

It's a cryptocurrency, just like bitcoin or ethereum.

According to The Verge, it's the eighth largest cryptocurrency in the world by volume.

At the moment, Coincheck says the theft has been limited to NEM, but after announcing the theft it restricted dealings in most other cryptocurrencies too.

The theft didn't appear to dampen investors' spirits, with Cointelegraph reporting cryptocurrency markets in Japan rising less than 24 hours after the hack.

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