Saturday, 15 December 2018

Japan's Financial Services Agency Conducts Cryptocurrency Exchange Inspections

A report on February 7, 2018, said that Japan's Financial Services Agency (FSA) had begun conducting surprise inspections of cryptocurrency exchanges. In total, all 32 exchanges in Japan stand to receive visits from the FSA.

Last Friday, February 2, FSA inspectors visited the Coincheck Inc. headquarters in Tokyo. That inspection came in the wake of a January 26 hacking incident: the exploit saw $530 million worth of NEM tokens stolen from the exchange. The funds were kept in a hot wallet with faulty security, as opposed to NEM's multi-signature contract. Coincheck's president said the use of the unsecure wallet was a result of understaffing and technical reasons.

In late January, the FSA gave Coincheck a February 13 deadline to provide a report on the hack, assessing the vector by which funds were stolen. The FSA also directed Coincheck to provide an "appropriate response to customers" and to integrate "risk management" measures.

Coincheck has pledged to refund users, but the FSA has yet to ascertain whether or not the exchange has access to the capital that would be necessary.

As the investigation into cryptocurrency exchanges continues, the FSA has committed that it may increase the scope of its efforts based on its analysis of reports.

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