Business

FSA raids more cryptocurrency exchanges in wake of Coincheck hacking

AFP-JIJI, Kyodo

The Financial Services Agency on Friday raided a number of cryptocurrency exchanges to follow up on the massive hack of Coincheck Inc. that saw cyberthieves steal $530 million in virtual currency.

The hack was one of the largest of its kind and prompted the FSA to search its offices last week after slapping it with a business improvement order.

Finance Minister Taro Aso said Friday that the raids would expand.

“We have started to raid several virtual currency exchanges,” he told reporters, adding that they were intended to “examine their internal governance structure.”

Aso, who is also minister in charge of financial services, said the government needs to strengthen its supervision of cryptocurrency exchanges.

Officials have suggested that Coincheck lacked proper security measures and left itself open to cybertheft.

In the wake of the hacking, the FSA instructed more than a dozen local cryptocurrency exchanges to submit reports on efforts to monitor systemic risks.

While Aso declined to reveal the names of the exchanges inspected, a source with knowledge of the matter said they were GMO Coin Inc. in Tokyo and Tech Bureau Corp. in Osaka.

The FSA is expected to expand its inspections to all cryptocurrency exchanges in the country over the next few months, according to a source familiar with the plan.

Japan has 16 registered exchanges and another 16 pending approval, the latter including Coincheck, according to the FSA. Japan requires such exchanges to register under the revised funds settlement law that took effect last April.

The heist sparked debate about whether and how to regulate digital currencies, which are rapidly becoming popular.

The Coincheck hack saw thieves siphon away 523 million units of the cryptocurrency NEM on Jan. 26, the value of which topped the $480 million in virtually currency stolen in 2014 from MtGox. That hack had prompted Japan to issue new regulations requiring exchanges to obtain licenses from the FSA, but Coincheck was allowed to operate for months as the agency reviewed its application.

The firm has said it will reimburse customers who lost money in the hack, which is still under investigation. Local media reports in recent days have suggested the hackers may have attacked from abroad.

The Yomiuri Shimbun newspaper earlier this week cited unnamed police sources as saying Coincheck was repeatedly accessed illegally via servers in the United States, Germany and the Netherlands days before it was hit.

The Asahi Shimbun reported Friday that some of the stolen cryptocurrency was sent to an exchange in New Zealand called Cryptopia.

Cryptopia runs a platform for trading bitcoin and other virtual currencies, its website says.

In recent weeks, regulators around the world have discussed or begun imposing new restrictions on virtual currencies.