Japan Gets Tougher On All Crypto Exchanges After Coincheck Hack

Japan Gets Tougher On All Crypto Exchanges After Coincheck Hack

Kerry Wise
January 31, 2018

Japan's financial regulator slapped Coincheck Inc. with a business improvement order after accusing the cryptocurrency exchange operator of ignoring repeated calls to address money laundering issues.

The announcement over the weekend helped to stabilize the whole cryptocurrency market after nervous trading on Friday rolling into the weekend.

As such, most major digital currencies were in the red for much of Friday's trading session.

Unlike Bitcoin, the number of which will gradually increase until there are a maximum of 21,000,000 in circulation, NEM started out in 2015 with 9 billion "preminted" coins (actually 8,999,999,999) for its ecosystem. Though the future of Coincheck is yet unclear, it stated that it will restart trading sometime soon. Due diligence when trading cryptocurrencies are vital. Bitcoin's price was $11,189.58, a drop of 4.32% from 24 hours ago. It did not recover to its high before the heist for more than three years. Apart from NEO, other cryptocurrencies were mostly in the red this morning.

Large fluctuations in cryptocoin values mean that a hot wallet deposit that seemed nearly trivially modest a few months ago might by now be worth more than your vehicle... These markets also became one of the prime targets of hackers to steal the money from the largest exchanges in these countries. Coincheck didn't use them and that's why they could have been hacked.

"Due to the nature of NEM's architecture and its advanced API, we are now reaching out to exchanges and exploring three different options". The hack was successfully carried out because of the usage of "hot wallet" instead of "cold wallet". "Now, the only way to catch up is to put more demands on the regulation". While they will repay customers, preventing this type of hack from happening again will not be easy whatsoever.

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Sources close to the investigation told NHK the police on Monday afternoon questioned employees of the exchange operator, Coincheck.

It's possible to trace blockchain transactions but not to identify the owners of the "wallets" where the crypto currencies are kept, says Choi.

A Lesson From South Korea?

Yes, there's a long history of thefts at cryptocurrency exchanges and wallets, dating back to the infamous robbery of Tokyo-based Mt Gox in 2014. Fourteen bitcoin exchanges came together in December 2017 to announce self-regulatory measures.

Even at $2000, many users may have thought that their online balances were reasonable enough, perhaps assuming that an attack that drained hundreds of thousands of accounts at the same time was unlikely.

Japanese exchange to reimburse its customers with $425 million.