Japan has witnessed several cases of online theft of digital money in the recent past. This became even further the case earlier this year, when over $530 million was stolen from Coincheck in Tokyo. This has seen Japan tighten the noose on cryptocurrency firms with even more regulatory measures being put in place.
…Unless you Put the Right Internal Control Mechanisms in Place!
As a result of this development, Japan has order the closure of seven cryptocurrency exchanges as part of the punishment, due to what they term regulatory lapses. According to the Financial Services Agency (FSA), these exchanges lacked the right internal control mechanisms that would sufficiently help detect and report cases of digital currency theft. As a result of this step by the FSA, Bitcoin prices suffered a small dip on Thursday.
Coincheck on the spot
Coincheck is one of the exchanges involved in this crackdown. This is, however, not the first time that Coincheck is getting into such a scrap as it had been served with another notice in late January. Other exchanges that were affected in January included GMO, FSHO and Bit Station. The latter two were given orders to cease operation for one month.
This latest decision by the FSA is, no doubt, one of the boldest moves thus far with regards to concerns about the security of cryptocurrency exchanges in Japan. This is a culmination of factors that first came to being in 2014, when Mt. Gox exchange collapsed before resurfacing following the Coincheck heist.
According to the head of the LDP Party’s cybersecurity taskforce, it was not fair to let unregistered exchanges continue with operations.
“It’s problematic that these 16 unregistered exchanges have been able to continue trading,” “In the first place, should they have been allowed to operate while their applications for registrations are still incomplete?”
Coincheck Open for Criminals Due to Poor Security
According to the regulator, Coincheck doesn’t seem to have done enough with regards to their security and thus cannot guarantee dealing with the risks of users losing money through online criminal dealings, such as terrorism financing and money laundering. It has, however, given Coincheck a deadline of March 22nd to submit a comprehensive report on the measures it will be taking to improve its safety.
After the sanctions by the FSA, Koichiro Wada, the CEO at Coincheck, told the press that they were facing such issues due to the rapid expansion of the business and thus were in the process of looking at options to deal with this in the short term, including taking responsibility and resigning.
What do you think about the decision by FSA to punish the exchanges? Was this a warranted move considering the security breaches? Should Mr. Wada resign? Let us know your views in the comments section below.