Japan FSA Responds to $530M Coincheck cryptocurrency theft

Japan FSA Responds to $530M Coincheck cryptocurrency theft after hackers managed to steal NEM coins from the “hot wallet”. What now for the victims of the hack attack? Will they be reimbursed? 

29 January, AtoZForex Japanese financial regulator has stated on Monday that it plans to investigate cryptocurrency exchanges across the country following the $530M Coincheck cryptocurrency theft. Moreover, the watchdog has stated that Coincheck will need to improve its operational systems.

Japan FSA Responds to $530M Coincheck cryptocurrency theft

The $530M Coincheck cryptocurrency theft was one of the biggest cybersecurity hacks in history. The theft also points out the vulnerabilities in trading an asset that global authorities are trying to get hold of. The hack also highlights the wider risks for Japan as it looks into leveraging the fintech industry to boost the economic growth.

The Financial Services Agency (FSA) has ordered Coincheck to carry out a number of improvements. On Friday, the cryptocurrency exchange has suspended all trading except for Bitcoin following the $530M worth of NEM coins theft. On Sunday, Coincheck stated it would reimburse about 90 percent of internal funds. The details are not yet provided.

The NEM coins’ theft has been carried out because of the usage of “hot wallet” instead of “cold wallet”. The Coincheck also has pointed out that the “hot wallet” does not use extra layers of security or a multi-signature system.

Japanese cryptocurrency exchanges regulation

Following the $530M Coincheck cryptocurrency theft, FSA has ordered the exchange to submit an incident report and measures for avoiding a recurrence by the 13th of February. The regulator also stated that if necessary, it will carry out on-site inspections of other exchanges, as well.

Japan has started to oblige cryptocurrency exchange operators to register with the authorities back in April 2017. Therefore, the exchanges could offer services before being registered. As of now, the FSA has registered 16 exchanges, while another 16 are still waiting for approval. Makoto Sakuma, the researcher at NLI Research Institute, has stated:

“It’s been long said that cryptocurrencies are a solid system but cryptocurrency exchanges are not. This incident showed that the problem has not been solved at all. If Coincheck screws up its crisis management, that could deal a blow to the current cryptocurrency fever.”

NEM coin’s value has dropped to $0.78 from $1.01 on Friday. However, it has managed to bounce back and is now trading at $0.966163.

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