Economy

Japan increases vigilance after a massive cryptocurrency theft

Japan increases vigilance after a massive cryptocurrency theft”

On Friday, the website halted sales and withdrawals of the currency NEM, and later extended restrictions to other cryptocurrencies except Bitcoin.

Tokyo-based exchange company Coincheck lost more than 500 million dollars' worth of digital money last Friday in a high-profile hacking incident. It said on Sunday it would return about 90 percent with internal funds, though it has yet to figure out how or when.

As a result of the incident, the Financial Services Agency is examining security measures in all virtual currency exchanges across Japan.

"We realize that this illicit transfer of funds from our platform and the resulting suspension in services has caused enormous distress to our customers, other exchanges, and people throughout the cryptocurrency industry", Coincheck said, promising to overhaul security measures.

Coincheck, which started in 2012, has been criticized for keeping its customers' NEM holdings in an online "hot" digital wallet rather than a much safer offline "cold" digital wallet.

Masatsugu Asakawa, Japan's top financial diplomat, said on Monday that cryptocurrency regulation was likely to be on the agenda at the March meeting of G20 finance ministers and central bankers in Argentina.

The FSA says it has ordered Coincheck to submit a report on the hack and measures for preventing it happening again by 13 February. It will conduct on-site inspections if it sees an issue. Coincheck's promise to reimburse the victims has calmed investors, even though the country's regulator has not confirmed whether the company has sufficient funds to do that. Pre-existing operators such as Coincheck have been allowed to continue offering services while awaiting approval. Coincheck's application was made in September. "If Coincheck screws up its crisis management, that could deal a blow to the current cryptocurrency fever".

Members of a Japanese girl pop group, the Virtual Currency Girls, said on Monday they had refused an offer to be paid in yen and would stay loyal to cryptocurrencies despite a $530 million (roughly Rs. 3,300 crores) cyber heist jeopardising their chances of getting paid. More recently, South Korean cryptocurrency exchange Youbit last month shut down and filed for bankruptcy after being hacked twice past year.



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