Coincheck resumes yen withdrawals after cryptocurrency theft

PUBLISHED : Tuesday, 13 February, 2018, 5:18pm
UPDATED : Tuesday, 13 February, 2018, 9:30pm

Digital currency exchange operator Coincheck resumed yen withdrawals for its users on Tuesday, following weeks of suspension triggered by the theft of 58 billion yen (US$533 million) worth of digital money.

Coincheck had been trying to confirm the safety of its platform following the theft in late January that forced it to suspend cryptocurrency trading. Japan’s regulator has conducted on-site inspections to see if the Tokyo-based exchange operator has a proper risk management system in place.

The company plans to process requests for yen withdrawals on a first-come-first-served basis. A source with knowledge of the matter said such requests amount to around 30 billion yen.

Since the largest-ever cryptocurrency theft came to light on January 26, the Financial Services Agency has issued a business improvement order and urged Coincheck to report back with steps to prevent a similar theft by Tuesday.

FSA inspectors have been checking if Coincheck has the financial strength to reimburse some 260,000 holders of NEM coins to the tune of 46 billion yen.

Financial Services Minister Taro Aso said the country’s watchdog will urge Coincheck to prioritise customer protection. “Through our on-site inspections, we will make sure that customers are protected,” Aso told reporters after a Cabinet meeting.

Coincheck is one of the 16 operators of virtual currency exchanges awaiting regulatory approval. Another 16 have already won approval under the country’s law requiring exchange operators to register.

The company submitted its business improvement plan Tuesday afternoon to the FSA.

The revised funds settlement law which took effect last April, after another Tokyo-based cryptocurrency exchange Mt. Gox shut down in 2014 after 48 billion yen worth of bitcoin were stolen.

Also on Tuesday, the FSA issued a warning, the first of its kind under the law, to Macau-based cryptocurrency exchange operator Blockchain Laboratory for not having registered with the government.

The growing popularity of digital currencies has boosted hopes for their greater use, but it also sparked debate about how to regulate them globally.

The latest theft has raised calls for stricter oversight of the industry which is expected to grow rapidly.

Bank of Japan Governor Haruhiko Kuroda said before a Diet committee Tuesday that virtual currency “does not have assets to back it up and has become a target for speculation.”

The FSA has already urged all exchange operators in Japan to report how they manage risks to protect customer assets and expanded its on-site inspections beyond Coincheck. It plans to cover all of them over the next few months.