FSA to Inspect Some Virtual Currency Exchange Operators Soon

February 8, 2018

Tokyo- In the wake of massive theft of customer assets held in cryptocurrency NEM from Tokyo-based virtual currency exchange operator Coincheck Inc., Japan's Financial Services Agency plans to conduct on-site inspections of some other exchange operators within this week based on the revised fund settlement law, informed sources have said.

The FSA will check in detail safety measures for the cryptocurrency exchange operators' computer systems and their methods to manage customer assets, and will slap administrative penalties if problems are found, the sources said.

On Jan. 26, Coincheck lost almost all NEM assets of some 260,000 customers, worth some 58 billion yen at the time, due to unauthorized access to the company's computer system.

On Feb. 1, the FSA ordered all 31 other virtual currency exchange operators to check on their own their safety systems, including measures against hacking, how they manage customer assets and many other items, and report the results to the agency.

The agency examined the reports and found it necessary to carry out detailed inspections on some operators in order to prevent theft of customer assets, according to the sources.

Cryptocurrency exchange operators are supposed to manage customer assets in offline computers to prevent unauthorized access. But Coincheck was found to have kept customer assets in computers connected constantly to the Internet and has therefore come under fire.

Following the massive theft, the FSA issued a business improvement order to Coincheck on Jan. 29 and conducted an on-site inspection of the company last Friday. Jiji Press