Japan Cracks Down on Seven Cryptocurrency Exchanges, Suspends Two

Thu, 03/08/2018 - 07:43
Darryn Pollock
Tokyo regulators crack down on seven cryptocurrency exchanges, suspending two of them
Japan Cracks Down on Seven Cryptocurrency Exchanges, Suspends Two
Cover image via U.Today

Following a recent hack of $530 mln at Japanese exchange Coincheck, Japanese regulators have stepped up their game, investigating a number of other cryptocurrency businesses for any irregularities.

This has led to the regulators cracking down on seven exchanges, going so far as to suspend the business of two of them as they look to shore up consumer safety in the hitherto unregulated cryptocurrency space.

Coincheck worries

Following from the original Mt. Gox hack of 2014, the Coincheck hack of $530 mln represents another major jab for Japanese crypto consumers. This led to regulators stepping in and taking a look at vulnerabilities of other exchanges.

A senior official at the Financial Services Agency told reporters at a briefing it had confirmed Coincheck had funding to reimburse its customers for NEM coins stolen from its exchange.

Along with Coincheck, the regulators also issued business improvement orders to the six other exchanges saying the seven exchanges lacked the proper and required internal control systems.

It ordered the suspension of operations at two of them, Bit Station and FSHO, for one month.

Bit Station using coins for personal gains

Part of the report found that the employees at Bit Station were found to be using customers' Bitcoin for the person's own purposes. They said the exchange, which has been allowed to operate on a provisional basis, dropped its application to become an authorized exchange.

Japanese regulators have come down hard on the businesses of those working in cryptocurrencies, but have not tried to crack down unnecessarily. It is more a move to protect customers as they found with Coincheck, the exchange lacked a proper internal control system for risks such as money laundering and terrorism financing.

About the author

Darryn Pollock is an award winning  journalist from Durban, South Africa. He picked up Vodacom’s Regional Sports Journalist Award in 2017 while expanding his Blockchain and cryptocurrency reach.  He is a contributor to Forbes, Cointelegraph, Binary District, and of course, U.Today. Darryn’s belief is that Blockchain technology will be the driving force of the next technological wave and it is the obligation of journalists and writers to tell its emerging story with integrity and pride.