Japan’s Financial Services Agency raided the offices of the hacked Coincheck cryptocurrency exchange to see if they had adequate funds to repay customers.
The recent hack of the Coincheck cryptocurrency exchange in Japan sent a shock wave through the crypto world. The total value of the loss was staggering, coming in at around $530 million. The Financial Services Agency (FSA) originally gave the exchange essentially a slap on the wrist, but due to the seriousness of the situation, FSA regulators raided the offices of Coincheck today.
After the hack occurred, the exchange publicly stated that they would refund $425 million back to the 260,000 users who had been affected. This represented about 90% of the funds stolen, but getting back 90% is far, far better than getting nothing back at all.
The Financial Services Agency came out with a pretty light punishment for the exchange. Essentially, they were told to put in safeguards to ensure that such hacks would not happen in the future and to submit a written report about the hack by February 13th to the agency.
Who’s There? FSA!
It seems that the FSA decided to be a little proactive, which makes sense in light of the magnitude of the hack. They raided the offices of Coincheck to ensure that the exchange has the necessary funds to make good on their promises of restitution, especially as the funds will be paid in yen and not virtual currencies.
Another reason for the regulatory raid is to see that the exchange has put the necessary security precautions in place, as well as to examine how the hack actually happened in the first place. Of course, one such reason for the success of the hack was that the exchange stored customer assets on a system that was connected to the internet 24/7.
This incident marks the very first regulatory raid by the Japanese government on a cryptocurrency exchange. As for the raid itself, Finance Minister Taro Aso says, “The investigation is being conducted to protect the current users.”
It makes sense for the Japanese authorities to make a show of force in investigating Coincheck and ensuring that clients would be protected. As China and other countries continue to clamp down on cryptocurrencies, Japan is reaping the benefits of the ongoing migration of crypto-related businesses. The country has put in legislation concerning cryptocurrency, such as the revised Payment Services Act, and even recognizes Bitcoin as a legitimate payment option.
Hopefully, the entire situation will be resolved in a satisfactory manner for everyone involved, even though Coincheck is going to have to eat the cost of the compensation.
What do you think about the FSA raiding the offices of Coincheck? Will the exchange make good on their promises to pay back those impacted by the hack? Let us know in the comments below.
Images courtesy of Nikkei Asian Review, The Japan Times, and Bitcoinist archives.