Business / Financial Markets

FSA to inspect some virtual currency exchange operators soon in wake of Coincheck theft

JIJI

Following the massive theft of customer assets held with Tokyo-based cryptocurrency exchange operator Coincheck Inc., the Financial Services Agency plans to conduct on-site inspections at some other exchange operators this week based on the revised law on fund settlement, sources with knowledge of the matter have said.

The FSA will check safety measures for the cryptocurrency exchange operators’ computer systems and their methods for managing customer assets, and will apply administrative penalties if problems are found, the sources said.

On Jan. 26, Coincheck lost almost all of the NEM coins belonging to some 260,000 customers, worth around ¥58 billion at the time, due to a hack of the company’s computer system.

On Feb. 1, the FSA ordered the 31 other virtual currency exchange operators in the country to check their safety systems — including measures to guard against hackers, how customer assets are managed, and other areas — 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 another theft of customer assets, according to the sources.

Cryptocurrency exchange operators are supposed to manage customer assets using isolated computers to prevent unauthorized access, but Coincheck has come under fire after it was found to have kept customer assets in systems connected to the internet.

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