Japan's FSA Takes Action Against The Coincheck Exchange

Coincheck handles 13 types of digital currency, some of which are known as "anonymous currency" that makes it nearly impossible to trace where funds end up.

According to Bloomberg, which refers to Coincheck representatives, the coins were sent "illicitly" outside the venue, while the firm is working to ensure the safety of all client assets.

Observers say the hack will lead to more government regulation of cryptocurrency exchanges.

At 5 p.m. on Friday, Recruit Lifestyle, the retail support arm of human resources conglomerate Recruit Holdings, voluntarily stopped the Bitcoin payment services it had provided to Meganesuper and other businesses with Coincheck.

Within the world of cryptocurrencies, theft is as regular as investors declaring "this time it is different" and "this is good for bitcoin".

The U.S. Treasury described cryptocurrencies as an "evolving threat" this month and said it's examining dealers to make sure they aren't being used to finance illegal activities.

Korean digital currency exchanges are classified as "mail order distributors", meaning they have the same status as online shopping malls.

The law went into effect a year ago.

The hack is one of the largest in history, falling nonetheless around $320 million behind the infamous Mt. Gox exchange heist in 2013. As prices of digital assets have soared, the platforms have become increasingly juicy targets for hackers. 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. Reports suggest the stolen crypto-currency was stored in an internet-connected "hot wallet" rather than a more secure "cold wallet".

Coincheck's CEO Koichiro Wada told press that the company had neither the staff nor the technological expertise to implement the security measures.

On Monday, Japan's financial regulator Financial Services Agency (FSA) ordered Coincheck to get more organized after hackers fraudulently lifted $530 million worth of digital money from its exchange, bumping the nation's cryptocurrency market in one of the largest cyber thefts.

Local media reported that Coincheck had submitted an application to FSA for a licence and was allowed to continue operating while it awaited a decision.

The exchange's fate remains unclear.

Vice president of the NEM Foundation, Jeff McDonald, said in a YouTube video that using multi-signature would have probably saved Coincheck a lot of trouble.

NEM like Bitcoin or Litecoin is a digital currency and now the 7 largest cryptocurrency in terms of market cap as per the stats provided by coinmarketcap.com and at the of the hack dropped from the usual $1 range to $0.85.

  • Zachary Reyes