Japan sanctions Coincheck after massive cryptocurrency heist
Tokyo, (MILLAT ONLINE):Japan on Monday imposed administrative measures on virtual currency exchange Coincheck after
hackers stole hundreds of millions of dollars in digital assets from the Tokyo-based firm in one of
the biggest heists ever.
Units of the cryptocurrency NEM worth $530 million were taken — based on the exchange
rate on Friday — exceeding even the $480 million in bitcoin stolen from the MtGox exchange
in 2014.
Coincheck suspended trading of all cryptocurrencies except bitcoin on Friday, and said
it had lost 523 million units of NEM, the 10th biggest cryptocurrency in the world based on market
capitalisation.
The Financial Services Agency (FSA) said in a statement that it had ordered Coincheck
to investigate the cause of the incident, “properly” deal with clients, strengthen risk management
and take preventive measures.
The financial watchdog told the exchange to respond to the orders by February 13,
warning that the agency would raid its office if necessary.
Coincheck has said it will use its own funds to reimburse about 46.3 billion yen (around
$430 million) — at a rate of 88.549 yen per NEM — to all 260,000 customers who lost their
holdings.
The company said it would reimburse customers in yen, not cryptocurrency.
The FSA said at a briefing Monday that it was checking to ensure Coincheck had
the ability to make those refunds.
The watchdog added that it was carrying out checks at other exchanges in the wake of
the theft to detect potential security problems.
The agency will supervise Coincheck to ensure the measures are being implemented and
contracts are being honoured, Chief Cabinet Secretary Yoshihide Suga said at a regular briefing.
“While examining the cause of the incident and taking necessary measures, we want
the ministries and agencies concerned to urgently study what further measures we’d need,” the
top government spokesman said.
– ‘Lacked common sense’ –
Japan’s Finance Minister Taro Aso told parliament on Monday that the government would
take “necessary administrative measures, including an on-site inspection.”
Coincheck “did not store the important things separately. I think they lacked fundamental
knowledge or common sense,” he said.
One unit of NEM was trading at 95 cents at around 0730 GMT on Monday, according to
coinmarketcap.com.
Japan is a leading market for cryptocurrencies, with nearly one third of global bitcoin
transactions in December denominated in yen, according to specialist website jpbitcoin.com.
As many as 10,000 businesses in Japan are thought to accept bitcoin, and bitFlyer —
the country’s main bitcoin exchange — saw its user base grow beyond one million in November.
Many Japanese, especially younger investors, have been seduced by the idea of
strong profits as the economy has seen years of ultra-low interest rates offering little in the
way of traditional returns.