Japan raids hacked crypto exchange, Bitcoin sinks lower

Sergio Caballero

04/02/2018 - Updated: 07/12/2022

Table of Contents

Week after the Tokyo-based company lost 0
1. Reimburse customers

bitcoin

Japan raids hacked crypto exchange

Week after Tokyo-based company lost $530

Japanese authorities on Friday raided virtual currency exchange Coincheck, a week after the Tokyo-based company lost $530 million in cryptocurrency to hackers.

The raid comes as Bitcoin dipped below $9,000 for the first time since November after India said Thursday it would take steps to prevent the use of cryptocurrencies.

The search of Coincheck's headquarters in Tokyo's Shibuya district was conducted by the Financial Services Agency, which had already slapped the company with an administrative order after the Hack.

"we have launched an on-site inspection to ensure the preservation of clients' assets," Finance Minister Taro Aso said at a briefing.

Japanese authorities have suggested that Coincheck security measures lacquered, making it vulnerable to theft.

The January 26 hack, which saw thieves siphon away 523 million units of the cryptocurrency NEM, exceeds the $480 million stolen in 2014 from another Japanese virtual currency exchange, MtGox.

Earlier this week, Japan's FSA gave Coincheck until February 13 to investigate the cause of the incident, "appropriately" deal with customers, strengthen risk management and take preventive measures.

Reimburse customers

Coincheck has said it will use its own funds to reimburse the 260,000 customers who lost holdings, at a rate of 88,549 yen per NEM.

The refund, which will be paid in yen, not virtual currency, will return to the company some 46.3 billion yen ($422 million).

In the wake of the MtGox scandal, Japan passed a law on cryptocurrencies that requires exchanges to be regulated by the FSA. The law came into effect in 2017.

Coincheck had submitted an application to the FSA for a license and was allowed to continue operating while awaiting a decision, the Agency said.

Japan is a leading market for cryptocurrencies, with nearly a third of global Bitcoin transactions in December denominated in yen, according to specialist website Jpbitcoin.com.

Virtual currencies are popular in other parts of Asia, including South Korea and China, but the Indian government on Thursday said it would crack down on their use.

Finance Minister Arun Jaitley, in his annual budget, said New Delhi would "take all measures to eliminate the use of these crypto assets in financing illegitimate activities or as part of the payment system."

Bitcoin, which soared to nearly $20,000 a unit in December, dropped to $8,800 on Friday, while other digital units such as Litecoin and Ethereum have also suffered massive losses from their recent peaks.