Coincheck Raided By Japanese Regulators

Japanese regulators pulled off a raid on the Coincheck cryptocurrency exchange. This comes as the Tokyo-based exchange was hacked earlier in the week. The hack resulted in the theft of a large amount of the NEM currency. The move also comes amid worries about how currencies are being utilized and managed by Japanese authorities.

The raid on Coincheck was the first such event to take place in Japan against a cryptocurrency exchange. The Financial Services Agency was responsible for operating the move. Coincheck was requested to get a risk management system and to report its functions to a regulator before February 13.

Coincheck is being impacted by the raid as it had been hacked recently. A hack in late January led to the theft of about $530 million worth of the NEM currency. More than a quarter of a million Coincheck customers were impacted by the theft with varying amounts of NEM stolen in each of these accounts.

Coincheck said that the service will reimburse those who were impacted. The customers will be reimbursed in Japanese yen. There are concerns over how Coincheck will be able to pay off the charges though.

Also, there are worries about why Coincheck had some currencies stored in hot wallets. These include wallets that are connected online and could have been easy for thieves to quickly get into. Hot wallets are often designed with active use in mind and can be used to handle fiat currencies. These are not considered to be as secure as what might be available elsewhere.

The general review from the FSA is being used to try and figure out why the hack took place and what makes it easy for the service to be hacked. It is unclear as to whether Coincheck had established proper security measures either. These include points on the proper use of different points relating to how currencies can be used.

The stolen funds from the hack are being carefully monitored as well. The funds are being reviewed to see if they are being used on any exchanges. There are no reports that they are being used anywhere at the moment. The key is to ensure they do not get onto any of those exchanges as it would be difficult to liquidate those assets if they are not found.

This is not the first time in Japan that a currency exchange in the country struggle with some kind of harm. In 2014, about 850,000 bitcoins were stolen from the MtGox exchange. This was good for nearly half a billion dollars when the loss took place. MtGox has since gone bankrupt. Some additional rules have been imposed since then to regulate the overall market and to prevent such issues from happening in the future.

There have been criticisms of the FSA following this hack as well. These include criticisms that the FSA is not doing enough to manage cryptocurrencies in Japan. This comes as the country continues to be one of the top traders in the world for the bitcoin and other similar currencies.