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Business News/ Home-page / Cryptocurrency exchange Coincheck raided after $500 mn heist
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Cryptocurrency exchange Coincheck raided after $500 mn heist

Japan's Financial Services Agency raids Coincheck's offices a week after the cryptocurrency exchange lost about $500 million to hackers, hauling out documents and computers as evidence

The theft, which follows the disappearance of about $470 million worth of bitcoins from the Mt. Gox exchange in 2014, sent shockwaves through the global virtual currency community. Photo: BloombergPremium
The theft, which follows the disappearance of about $470 million worth of bitcoins from the Mt. Gox exchange in 2014, sent shockwaves through the global virtual currency community. Photo: Bloomberg

Tokyo: Japan’s Financial Services Agency raided Coincheck Inc.’s offices a week after the cryptocurrency exchange lost about $500 million to hackers, hauling out documents and computers as evidence.

The inspection was conducted to ensure security for users, finance minister Taro Aso said. On Friday morning, 10 FSA officials entered Coincheck’s premises to gain a better understanding of how the exchange is operating in light of the regulator’s business improvement order imposed earlier this week, an agency official told reporters in Tokyo.

The theft, which follows the disappearance of about $470 million worth of bitcoins from the Mt. Gox exchange in 2014, sent shockwaves through the global virtual currency community. The incident has spurred calls for more regulation at a time when many governments are struggling to formulate a response to the digital-asset boom.

According to Coincheck’s account of the incident, an unidentified thief stole 523 million coins tied to the NEM blockchain project, which were trading at about 94 US cents at the time of the hack. It wasn’t until around 11 am on Friday morning — about eight hours after the initial breach — that Coincheck staff noticed an alert pointing to a sharp drop in their NEM coin reserves.

The regulator on Monday told Coincheck to submit a report by 13 February detailing the causes of the incident and how it will improve internal controls. FSA officials at the news briefing declined to comment on Coincheck’s financial condition.

While Bitcoin and other cryptocurrencies have rebounded from their selloff on Friday — thanks in part to Coincheck’s assurances over the weekend that customers would be partially reimbursed — market observers said concerns over security lapses are likely to persist.

One of the victims of the Coincheck heist was Virtual Currency Girls, a newly formed eight-member group that mix wrestling masks with maid outfits to perform songs. Its management office was paying members with cryptocurrencies and had ¥2 million ($18,400) deposited at Coincheck. Bloomberg

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Published: 02 Feb 2018, 09:21 AM IST
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