CoinCheck: Regulators raid Tokyo currency exchange

Japanese financial regulators on Friday raided the office of virtual currency exchange Coincheck, which lost some 58 billion yen ($530 million dollars) worth of cryptocurrency held by its customers when it was hacked last week.

 The Financial Services Agency inspected the Tokyo-based exchange operator under the revised Payment Services Act to check whether the funds can be returned to customers and probe security measures properly.

This is the very first time Japanese regulators have raided a digital currency exchange. coincheck

“The current investigation is being conducted to protect the current users,” stated Finance Minister Taro Aso on Friday. He also demanded customers receive appropriate treatment and further ordered all other exchanges to report back on their risk management procedures.

CoinCheck was infamously hacked on Jan. 26th and lost nearly all of the NEM virtual currency held by some 260,000 customers.

The company has said it will return the money to all customers in yen – a figure estimated currently at north of about 46 billion yen.

The Financial Services Agency is examining the company’s finances to establish whether or not it is in a position to fulfill its promise.

They are also checking that sufficient security measures have been put in place to prevent another attack as well as seeking to determine how the incident unfolded.

Coincheck’s clients assets were stored (and managed) on a system that was constantly connected to the internet — a practice that is now deemed insecure.

On Jan. 29, the Financial Services Agency ordered Coincheck to take appropriate compensation measures for its customers and set up a risk management system to prevent a recurrence of the incident.

Coincheck was ordered to submit a written report to the watchdog organization by Feb. 13.

However, given the high profile nature of the incident, the Financial Services Agency decided to step in and conduct an investigation before the submission of the report.

A registration system for cryptocurrency exchanges was introduced in April of 2017. Coincheck is currently undergoing the checks required for registration. The exchange has been in operation since before the system’s introduction and is required to follow the same exact rules as exchanges that are registered.

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