Legal

Japanese lawmakers work to better manage cryptocurrency risks

The Japanese Financial Services Agency has announced that it is looking at all cryptocurrency exchanges in the country. This comes in the wake of another coin heist perpetrated by hackers on the Coincheck Exchange.

The Hack

The hack on Coincheck happened early on the 26th of January and the company has confirmed that 58 Billion Yen, around $500m USD worth of NEM was stolen and was sent to 11 different wallets.

The company has confirmed that this was due to keeping the funds in a hot wallet as well as not having any form of multi-signature security.

NEM developers have created a tool to track all of the stolen coins, and have also tagged the wallets as recipients of the stolen funds. Any wallet that these funds are transferred to will also be tagged by their system. We are now aware that last Thursday, Philippine blockchain technology company “Appsolutely” received about 2,000 NEM coins in its ICO from one of these wallets.

The NEM payment was valued at around $2000.00 USD and it is not known if the account holder received the ICO tokens. Some funds have also been sent to exchanges in the U.S. and New Zealand. NEM developers have promised to continue to track the funds in order to catch the hackers.

16 Exchanges are fully licensed

The FSA in Japan published a list of all exchanges in Japan. This consists of 16 fully licensed exchanges and another 16 that are currently being reviewed.

The first 16 exchanges were approved in September and December 2017 respectively.

16 Exchanges are under review

The FSA had not previously released the names of the companies that have applied for licensing. These companies are currently classified as “deemed virtual currency traders” until approved. One of them is Coincheck, the subject of the hack.

All exchanges to be inspected

Following the hack, the FSA issued an improvement order to Coincheck and ordered it to submit a report by the 13th of February. Coincheck is also required to produce measures to prevent it recurring. The FSA also conducted an on-site inspection of the company to ensure the protection of users. Coincheck has promised to repay the affected customers from their own funds, and the FSA will be investigating whether they have the financial means to do so.

The FSA has also ordered an internal inspection of all the other exchanges with a 43 point checklist according to Jiji Press. The exchanges are to report on issues such as the details of their systems to manage their customers’ assets as well as how they are prepared to prevent cyber attacks.

The move from the government is being positively received by consumers as Japan pushes forward its adoption of Bitcoin and other cryptocurrencies as legal tender and continues to support the technology and its many benefits.

Tiaan Wolmarans is a cryptocurrency investor and trader, airplane pilot, musician, and writer.

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