Japan's FSA Takes Action Against The Coincheck Exchange

Casey Dawson
January 31, 2018

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Japan's financial regulator has ordered hacked exchange Coincheck to "improve" but appears uninterested in restricting cryptocurrency activities.

But it has recovered since and nearly touched the $600 billion mark Monday morning. The news sent a brief shock to the cryptocurrency market.

"Nonetheless, I would certainly refrain from panic: Coincheck's announcement to compensate the victims of the breach is laudable and boosts trust towards digital currencies".

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Unlike Bitcoin, the number of which will gradually increase until there are a maximum of 21,000,000 in circulation, NEM started out in 2015 with 9 billion "preminted" coins (actually 8,999,999,999) for its ecosystem. Bitcoin, specifically, has found support close to the $10,000 level and demand remains reasonably robust until selling is seen again around the $12,000 level - a resistance level that bitcoin has struggled to break free from this month.

In 2014, Tokyo-based Mt Gox, which once handled 80 per cent of the world's Bitcoin trades, filed for bankruptcy after losing around half a billion dollars worth of Bitcoins. Due diligence when trading cryptocurrencies are vital. Following the theft, it fell 11 percent over a 24-hour period. Cryptocurrency exchanges have a history of such unfortunate events. Another major exchange, Bitfinex, repaid customers who were affected by $72 million hack in August 2016. The 260,000 users affected by the hack will be reimbursed at a rate of $0.82 per coin. The perpetrators managed to make off with $534 million worth of NEM tokens. Furthermore, Coincheck has not been using any extra protection system, such as multiple factor verification. NEM said it has already shown exchanges how to check if an account has been tagged. That contrasts with a cold wallet, where funds are stored securely offline.

A cryptocurrency exchange in Japan is coming under government scrutiny after it said hackers stole $530 million from its users. This massive heist also calls for focus on more regulations on exchanges and advantages of decentralized ways of trading. Coincheck has been ordered by the regulator to submit a report on the hack and detail measures for preventing something like this from happening again by February 13th. The metropolitan police department has also opened an investigation into the incident.

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