The crackdown on the Japanese cryptocurrency industry intensified Thursday as operations at two exchanges were suspended and troubled Coincheck Inc. was ordered to “conduct a drastic review on its management team.”

The Financial Services Agency’s move, which also affected four other firms, highlights the rising pressure on domestic virtual-currency exchanges to strengthen security and consumer protection in light of the Coincheck hack, which cost the Tokyo-based startup ¥58 billion worth of NEM coins.

Kanagawa-based Fsho and Nagoya-based Bit Station were ordered to halt exchange services until April 7.

In a statement, the FSA said that Fsho neglected to thoroughly check large-scale transactions and claimed the firm “has not implemented necessary measures to run a cryptocurrency exchange in a decent and assured way.”

Bit Station was punished because its senior official embezzled clients’ cryptocurrency deposits, according to the FSA.

Japan started beefing up regulations on virtual-currency exchanges last April, requiring them to register with the government. Fsho and Bit Station had not received approval but were allowed to operate because they initiated service before the revised law took effect in April.

The FSA said Bit Station intends to drop its application to become a registered exchange.

The FSA also issued another business improvement order to Coincheck, saying it needs to drastically review its management team, ensure consumer protection and put measures in place to prevent money-laundering and terrorism funding.

At a news conference Thursday, Coincheck CEO Koichiro Wada said the firm is eyeing a management reshuffle and hinted that he might step down.

Coincheck must report its progress to the FSA by March 22.

Coincheck said it will start a ¥46 billion compensation plan for about 260,000 customers who lost their NEM coins starting next week. It will pay them in yen and details will be disclosed on its website next week.

The firm also revealed that its investigation of the hacking incident found someone was able to steal the NEM coins by sending malware to Coincheck employees’ computers via email and remotely accessing its NEM server.

Four other firms were also hit by the FSA clampdown, including registered exchanges Tech Bureau Corp. in Osaka and Tokyo-based GMO Coin Inc., the regulator said.

Tech Bureau has experienced many problems, such as system malfunctions, unauthorized withdrawals and irregular transactions, but its management has done neither enough investigation to identify the causes nor come up with countermeasures.

GMO Coin has also frequently caused system troubles but has not made necessary efforts to prevent recurrences.

The two other firms are Tokyo-based Bicrements Inc. and Fukuoka-based Mr. Exchange Inc. The FSA alleges the firms did not have sufficient awareness of legal compliance and kept clients’ assets in an inappropriate manner.

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