After CoinCheck lost $534 million worth of NEM in a heist that shocked the world last week, the Japanese Government has wasted no time in taking action. Regulators have demanded that CoinCheck bump up their security. Furthermore, the Tokyo Police have begun a full-fledged investigation. Besides for the heist incident concerning Mt.Gox in 2014, the CoinCheck heist is the biggest to ever hit the world of cryptocurrency.
The incident comes just as Japan is trying to establish itself as the epicenter of cryptocurrency. Already 30% of the world’s Bitcoin transactions are coming in the form of Japanese Yen. Last year the government had officially made Bitcoin legal tender. Across the country, there are currently 15 registered exchanges. CoinCheck was in the process of becoming registered, but it was told that its cybersecurity was below standard and needed to be worked on.
Three days after the heist, on January 29, FSA issued CoinCheck with a business improvement order. The note states openly, “an unsuitable management system had become the norm at the firm.” They also have until February 13 to do the following.
- Determine the chains of events and cause of the hacking
- Respond respectfully to the affected customers and reimburse them for their loses
- Tighten the exchange management and find out who is responsible for allowing the breach
- Come up with a way to enhance the current system and create measures that will assure another breach would not be possible
The FSA isn’t keeping an extra eye solely on Coincheck either, it is now looking into every exchange operator in the country. It will even make some onsite inspections.
According to Japan’s largest newspaper The Yomiuri Shimbun, Police have clarified that the NEMs were stolen and sent to one specific address. The NEMs were held them for a time before being transferred to eight different addresses. The police are keeping a keen eye out for the virtual currency.