Japan’s Financial Services Agency is set to fine Coincheck, a popular Japanese cryptocurrency exchange that $534 million worth of NEM tokens were stolen from last week, although the amount of the fine is not yet known. Regulators around the world have warned about the dangers of investing money in digital currencies, citing concerns about security and extreme volatility.
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On Sunday, the exchange agreed it would reimburse about 90 percent of internal funds. The regulator may also carry out on-site inspections if it deems them necessary.
Coincheck has also released a press statement about compensation for the theft. Nevertheless, it had “nothing to do with NEM but rather Coincheck’s lack of strong security measures”, she said in a series of tweets.
The government has been warning the cryptocurrency exchanges to ramp up security. It has been operating under FSA rules while waiting for a decision.
Online brokerage services provider Robinhood announced its plans to launch commission-free cryptocurrency trading service.
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. The exchange said it has been in touch with Japan’s Financial Services Authority and the Tokyo Metropolitan Police.
The heist occurred as Coincheck was stepping up marketing efforts.
“A lot of bad news had already kind of been filtered and hit the market”, Kay Van-Petersen, a Singapore-based global macro and crypto strategist at Saxo Capital Markets told Bloomberg.
The scandal has triggered an immediate public backlash.
Exchanges getting hacked is a common affair with BitFinex, one of the most widely used exchanges facing DDOS attacks previous year and now it’s Japanese biggest exchange CoinCheck’s turn. The company immediately froze deposits and withdrawals for all crypto currency except bitcoin, as it assessed losses in NEM, a less well-known currency. The executives of Coincheck expressed optimism about recovery.
Virtual currencies are managed using “wallets”. Roughly eight hours after hacking into Coincheck’s system, the hackers initiated the unauthorized transfer that was detected by the company later.
NEM’s XEM token, the main victim of the hack, has since broadly recovered as markets begin moving on from the shock.
The exchange, Coincheck, has promised to partially refund the 260,000 cryptocurrency investors affected by the theft, although it didn’t say when it would do so or where it’s getting the money from.
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It added that the hacker had not moved any of the funds to any exchange or personal accounts but that it had no way to independently return the stolen funds to its owners. This automated system will follow the money and tag any account that receives tainted money.
