Financial Services Agency issues biz improvement order to hacked Coincheck

January 29, 2018

Tokyo- Japan's Financial Services Agency issued a business improvement order to virtual currency exchange operator Coincheck Inc. on Monday, after the company was robbed of about 58 billion yen's worth of customer assets due to hacking last week.

The FSA took into account the huge loss of customer money, while finding that Coincheck's security measures were insufficient, officials said.

The regulator ordered the exchange operator to strengthen internal controls and take measures to prevent similar incidents.

Through the hacking early on Friday, almost all amounts of cryptocurrency NEM on Coincheck were lost, with about 260,000 customers affected.

This was the largest-ever theft of money from a virtual currency exchange, exceeding the loss of 47 billion yen from bitcoin exchange Mt. Gox in 2014.

Coincheck has been criticized for its allegedly poor security measures, including the management of customer accounts in computers connected to the Internet.

On Sunday, the exchange operator announced that it will pay Japanese yen to all affected customers to compensate for their losses.

Coincheck also reported to the FSA on Sunday about the incident and plans to boost security, but it was told to submit an additional report.

Virtual currency exchange operators in Japan are required to register with regulatory authorities under the revised law on fund settlement, which came into force in April last year.

Coincheck's application is under review, but the company is subject to the same laws and regulations as registered operators because it has been operating the exchange since before the revised law took effect.

At a news conference on Monday, Chief Cabinet Secretary Yoshihide Suga expressed the government's intention to discuss stricter regulations on virtual currencies.

"After determining the cause (of the incident) and devising necessary measures, relevant ministries and agencies will consider quickly what kind of responses we should take," Suga said. Jiji Press