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.
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.
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.