Japan Cracks Down on Two Cryptocurrency Exchanges After Massive Hack

Japan Cracks Down on Two Cryptocurrency Exchanges After Massive Hack

in News
Japan’s Financial Services Agency (FSA) shut down two cryptocurrency exchanges (Bitstation and FSHO) today, ordering them to suspend operations for a month, as part of a crackdown following the $534 million hack of Coincheck in February. The regulator said a Bitstation executive had used some customer funds for personal transactions, while FSHO is accused of not adequately protecting its customers. The Japanese regulator also imposed "administrative penalties" on five other exchanges, including Coincheck, ordering them to strengthen their internal management and make other improvements to their operations. The punishments represent the FSA’s broadest response yet to concerns over security at Japanese cryptocurrency exchanges, which were first triggered by the 2014 collapse of the Mt. Gox exchange and resurfaced with the Coincheck heist. The exchanges ordered to improve their operations must file a plan to the agency by March 22. Japan has been hoping to become the cryptocurrency capital of Asia, and perhaps the world. More than 30% of all global bitcoin transactions are conducted in yen, and in April of 2017, the government made Bitcoin legal tender. The FSA crackdown, while it may spook some aficionados of cryptocurrency, however, can be taken as a sign that Japan is hoping to build an environment in which customers feel safe in entrusting their money and virtual money with the exchanges. J.Maurice, a cryptocurrency expert, specializing in Bitcoin, and the representative director of WIZ K.K. (Tokyo), welcomed the crackdown by the FSA.
"We are considering applying for a cryptocurrency exchange license this year so we are following this news with great interest. There was a time when Mark Karpeles, the CEO of Mt.Gox, approached the FSA for advice and they told him to do as he wished since bitcoins were unregulated. Now they [the FSA] are taking steps to make sure that cryptocurrency users are protected. The general public doesn't buy or sell depending on their confidence in the FSA, but they might choose which exchange to use depending on what the FSA says or does. Would you trust your money to an exchange that the FSA just slapped with a business improvement order?"
 

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