Coincheck meets Japan deadline for explaining RM2b hack

by BLOOMBERG

TOKYOJapan’s Coincheck Inc, the cryptocurrency exchange that lost about US$500 million (RM1.97 billion) to hackers last month, said it met a regulatory deadline for submitting a report on the incident and outlined steps to improve security so it can continue operating.

The report to Japan’s Financial Services Agency (FSA) explains how the hack occurred, what kind of support will be provided to customers and how systems will be bolstered to prevent future hacks, the company said in a statement yesterday. The FSA will now review Coincheck’s report to decide whether to grant a licence to the exchange, which was allowed to operate without one before the theft.

The US$500 million hack, the largest in a run of cryptocurrency heists that stretch back to Tokyo-based Mt Gox in 2014, has increased calls for stricter oversight of the fast-growing industry. Japan has tried to navigate a middle road by allowing most operations to continue while enacting new regulations in April.

“We plan to continue making meaningful improvements to our system,” the company said in its statement. “We promise to continue working tirelessly to regain your trust through meaningful and tangible improvements to our services and platform.”

It’s unclear whether Coincheck identified the cyber-thieves. South Korea’s spy agency is said to have begun investigating the possibility that North Korean hackers orchestrated the theft.

Also yesterday, Coincheck began letting customers make withdrawals in yen after imposing a freeze. One individual contacted by Bloomberg News provided documents showing

that about 106 million yen (RM3.92 million) was successfully moved from Coincheck to the person’s bank account this morning in Tokyo. The exchange said last week it would restart yen withdrawals, though it hasn’t said when other currencies deposited there can be withdrawn.

“We are continuing to confirm and improve the security of our systems in order to resume transfers of other cryptocurrencies and begin reparation payments as soon as possible,” the company said.

Separately, the FSA yesterday ordered Macau-based Blockchain Laboratory Ltd to stop operating in Japan without a licence. The startup offers seminars and consulting services on cryptocurrencies in Japanese, according to its website. Co-founder Jay Liu said he could not immediately discuss FSA’s order, while FSA officials said the company was not applying for an exchange licence. — Bloomberg