blockchain use

Japan’s Government to Inspect 15 Crypto Exchanges Awaiting Certification

Japan’s financial services minister has said today that it plans to conduct on-site inspections of 15 cryptocurrency exchanges following the hack at Coincheck.

Speaking at a news conference, Taro Aso, Japan’s financial services minister, said that the inspections would be looking at those that had filed for certification with regulatory authorities, reports the Japan Times.

The move comes after the hack at Tokyo-based digital currency exchange Coincheck, which saw the theft of $530 million worth of NEM last month. The exchange has since frozen its digital currency withdrawals services; however, it resumed its yen withdrawals on Tuesday.

According to Aso, the inspections will focus on the exchanges computer system safety measures and how they manage customer assets. Of the 15, five have already been informed of the upcoming inspections, the report indicates.

In light of the Coincheck hack, the country’s financial watchdog, the Financial Services Agency (FSA) ordered all licensed and unlicensed exchanges to report on their safety measures and their steps to preventing hacks.  Following the reports, the FSA has now deemed it necessary for detailed inspections to take place all all of the 15 unlicensed cryptocurrency exchanges.

Unlike China’s approach to the digital currency market, Japan has been more embracive of the industry. As a result, the government introduced a registration system for digital currency exchanges when it recognised cryptocurrencies such as bitcoin as a legal form of payment last April.

Notably, cryptocurrency exchanges that were in operation before the revised law went into effect, but have yet to be registered, are provisionally allowed to conduct their business during the registration process. Prior to Coincheck’s hack, the exchange was also permitted to operate. However, following the hack, and the submission of its report to the FSA earlier this week, the agency has to determine whether to give the exchange a license to continue operating.

Coincheck also faces the brunt of disgruntled investors after a lawsuit was filed against the company on Thursday. A group of seven traders, who filed the suit at the Tokyo District Court, are seeking the reimbursement of frozen assets amounting to 19.5 million yen ($182,910). A second lawsuit is expected to be filed against the exchange on the 27th February to account for any lost value in investors’ coins frozen by Coincheck.

After the hack, Coincheck vowed that it would reimburse 260,000 of its customers holding NEM coins, amounting to a total of 46 billion yen ($431 million).