Japan punishes crypto exchanges after massive hack

Tokyo: Japanese authorities on Thursday ordered two cryptocurrency exchanges to suspend operations as part of a clampdown following a massive hack that saw thieves steal hundreds of millions of dollars in virtual currency.
The Financial Services Agency (FSA) said in a statement it had ordered FSHO and Bit Station, exchanges based in Yokohama and Nagoya, to temporarily halt their operations for a month from Thursday.
The agency alleged that FSHO “does not have a proper system to monitor trading and has not given training to its employees,” while an employee of Bit Station “diverted digital currency deposited by clients for his personal use.”
Immediate comments from the two exchanges were not available. Authorities also ordered five other exchanges, including Coincheck, to improve their business practices.
Coincheck was already slapped with sanctions in January following the hack of its systems, which was one of the largest of its kind and resulted in the disappearance of NEM cryptocurrency worth $530 million At a press conference, Coincheck said it would start reimbursing customers affected by the theft and aim to restart its operations from next week, adding that details would be announced later on the firm’s website.
The company, whose offices were searched by authorities last month, has pledged to reimburse about $400 million to all 260,000 customers who lost their holdings of NEM, then the 10th biggest cryptocurrency by market capitalisation.
Coincheck chief operating officer Yusuke Otsuka said the company’s system was breached after several staff members opened e-mails containing malware.
The firm had failed to upgrade its systems to keep up with the rapid expansion of the cryptocurrency market, he said. — AFP