Japanese Crypto Associations Merging to Restore Trust Across the Industry

Japanese Crypto Associations Merging to Restore Trust Across the Industry

Japan’s two cryptocurrency associations have reportedly decided to merge in order to restore trust in the industry and accelerate self-imposed rules. Once approved by the Japanese financial regulator, the new organization will have the power to set penalties for breaches of self-regulation.

Also read: Japan’s DMM Bitcoin Exchange Opens for Business With 7 Cryptocurrencies

Two Crypto Associations Merging

Japan currently has two cryptocurrency industry associations: the Japan Blockchain Association (JBA) and the Japan Cryptocurrency Business Association (JCBA). The former is headed by Bitflyer CEO, Yuzo Kano, and has a total of 88 members, while the latter has a total of 154 members, according to Minkabu publication.

Japanese Crypto Associations Merging to Restore Trust Across the IndustryThe two organizations have reportedly been in talks to merge after the hack of one of the country’s largest exchanges, Coincheck, where 58 billion yen worth on the cryptocurrency NEM were stolen. They “are hurried to restore trust in the industry,” Forbes Japan reported.

They “will be integrated to establish a new self-regulating organization,” to focus on areas such as safety management system and compensation of customer assets, the news outlet added. In addition, the new entity will also focus on the reliability of crypto exchanges that have already been approved by the Japanese Financial Services Agency (FSA). Currently, there are 16 approved exchanges and 16 under review, including Coincheck.

On Thursday, Nikkei reported:

Two cryptocurrency industry groups in Japan [JBA and JCBA] have agreed to merge in an effort to accelerate the establishment of voluntary regulations and regain public trust in the aftermath of a massive virtual currency heist.

Set to launch on April 1, “The new organization’s chairman will likely be JCBA Chairman Taizen Okuyama, president of Money Partners Group,” the news outlet detailed, adding that Kano is “expected to become the self-regulatory body’s vice chairman.”

Commenting on the news of its merger with the JBA, the JCBA issued a statement on Thursday, stating that no details have been decided at this time.

Accelerating Self-Regulations

Japanese Crypto Associations Merging to Restore Trust Across the IndustryThe new entity will need the approval of the FSA. Under Japan’s revised payment services law which went into effect in April of last year, cryptocurrency operators are allowed to form a self-regulatory organization. They can “set industry rules, conduct investigations on members, and impose punishment,” the Japan Times elaborated.

However, the FSA previously “refused to allow two self-regulatory bodies, urging the industry to create a unified organization by merging the JBA and the JCBA,” Nikkei explained on Thursday, adding that:

Once the new body is approved by the agency, it will gain the power to set penalties for breaches of its self-imposed rules. This should also help address calls by banks and other businesses in the conventional financial industry for virtual currency businesses to establish a robust self-regulatory regime.

Do you think the merger will help the crypto industry gain more of the public’s trust? Let us know in the comments section below.


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Japanese Cryptocurrency Coincheck Faces Lawsuit over Withdrawals

The post Japanese Cryptocurrency Coincheck Faces Lawsuit over Withdrawals appeared first on CCN

Investors have opened legal proceedings against embattled Japanese cryptocurrency exchange Coincheck. The Tokyo based platform was the victim of a major hack last month, with a reported loss of $530 million worth of XEM. The platform quickly closed both fiat and cryptocurrency withdrawals following the breach, in an attempt to prevent further possible loss. Whilst Yen … Continued

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Coincheck Clients Withdraw $372 Million; NEM Theft Refunds are Coming

The post Coincheck Clients Withdraw $372 Million; NEM Theft Refunds are Coming appeared first on CCN

After removing a temporary freeze on withdrawals today, Japanese cryptocurrency exchange Coincheck said it has completed transfers worth 40.1 billion JPY ($372 million) in withdrawal requests by customers. Weeks after suffering the ignominy of being the victim of the world’s biggest cryptocurrency theft, ever, Coincheck has kept its promise to lift the temporary suspension on … Continued

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Tokyo Police Question NEM Trader Over Coincheck Theft

The post Tokyo Police Question NEM Trader Over Coincheck Theft appeared first on CCN

Japanese police have reportedly questioned a domestic trader who converted a small portion of stolen NEM from Coincheck into Litecoin as a part of an ongoing investigation. Citing sources with an ear to the investigation of the recent major theft of NEM tokens from Japanese exchange Coincheck, the Nikkei is reporting that police have questioned at … Continued

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Coincheck Announces JPY Withdrawals Will Resume Next Week

Coincheck Announces JPY Withdrawals Will Resume Next Week

This Friday the Japanese exchange Coincheck has announced the resumption of yen (JPY) withdrawals will begin next week. The news follows the trading platform halting operations on the 26th of January. That day Coincheck was hacked and lost a total of 523,000,000 XEM, but the exchange promised to pay back the 260,000 customer accounts that were compromised. JPY withdrawals will be enabled for the trading platforms users beginning February 13, 2018.

Also Read: Japanese Crypto Exchanges Strengthen Self-Regulation Following Coincheck Hack

Coincheck Plans to Resume JPY Withdrawals Next Week

Coincheck Announces JPY Withdrawals Will Resume Next WeekAccording to the Japanese exchange Coincheck, the platform will resume yen withdrawals next week. The exchange says that a temporary suspension of JPY operations was put in place to protect the assets of Coincheck customers. The company says that “outside experts” are working with the trading platform to ensure withdrawals are ready for February 13th. Right now Coincheck reveals customer assets are being held by another party.

“Currently, all customer JPY assets are being stored in a customer-specific account in a major financial institution,” explains the Japanese exchange.  

We plan to resume normal operations for JPY withdrawals from the following date and will process customer requests in the order in which they come in.         

The Resumption of JPY Withdrawals Is Unrelated to XEM Reparation Payments

Coincheck Announces JPY Withdrawals Will Resume Next Week
Coincheck says the JPY withdrawals are unrelated to the NEM/XEM restitution.

Coincheck also notes that the withdrawals of JPY and the date mentioned is completely “unrelated to reparation payments for the XEM.” Just before the first of February Coincheck had announced that approximately 260,000 affected accounts ($423Mn USD) would be reimbursed. Balances will be repaid in JPY via the Coincheck Wallet the firm has stated and will be valued at approximately $0.81 USD per token. At the moment that price is much more than the current rate XEM tokens are being sold for as the spot price is $0.56 per coin.   

Withdrawal requests will be initiated on a first come — first serve basis, and Coincheck says the company may contact certain customers separately in order to confirm withdrawal details. As far as cryptocurrencies operations are concerned the exchange plans to lift withdrawal restrictions as soon as the company feels they are “able to guarantee the secure resumption of operations for each feature.”     

“If further complications preventing the safe resumption of withdrawals are discovered, the resumption date may be extended in order to guarantee customer asset security,” Coincheck concludes.

What do you think about Coincheck preparing to resume operations after the recent hack? Do you think the exchange will fulfill its promise to pay back the XEM at $0.81 per coin? Let us know your thoughts on this story in the comments below.


Images Shutterstock, Coincheck and the NEM/XEM logo. 


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Cryptocurrencies – Excitement is Limited

Cryptocurrency excitement

Despite several warnings and intensifying regulatory actions, there is cryptocurrency excitement today as traders are vigorously capitalizing on the buying opportunities. Bitcoin price moved to the range of $8,000 after hitting the new support level of $6,000; all this happened in only 24 hours.

Cryptocurrencies extended Tuesday’s rally today and the majority of digital currencies are up at a double-digit rate, while the total market capitalization rebounded to the level of $4 billion.

 

Source Image: coinmarketcap.com

At the time of writing:

 Ethereum (ETH) trades ...

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NEO & NEM (XEM) Up Today

The cryptocurrency market is rebounding today after many coins lost double-digit percentage value yesterday. China announced their implementation of banning both foreign and domestic cryptocurrency websites with their country-wide firewall. Panic sells have become a common theme as countries publically announce new regulations around cryptocurrency. However, it seems the fear has subsided as most coins within the top 10 are showing green on the market at press time. Currently, NEO (NEO) and NEM (XEM) are leading the charge.

NEO

Source: CoinMarketCap

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Cryptocurrency Is Harder to Launder Than Fiat Currency

Cryptocurrency is Harder to Launder Than Fiat Currency

Bitcoin is a tool for terrorists and money launderers. At least that’s what your elected officials believe. When western leaders are pressed for their thoughts on cryptocurrency, that’s invariably the first sound bite to leave their lips, followed, occasionally, by a begrudging acknowledgement that “the underlying blockchain technology has potential”. But as the case of the $400 million of NEM stolen from Coincheck last week shows, laundering huge amounts of cryptocurrency is surprisingly hard. Laundering fiat currency, on the other hand, is extremely easy when you know how.

Also read: New Research: Laundering of Illicit Funds Less than 1% of Bitcoin Transactions

Coincheck, NEM and the Curse of the Tainted Crypto

Cryptocurrency is Harder to Launder Than Fiat Currency
Coincheck’s glum president at a press conference on Friday.

After successfully extracting over $400 million of NEM from Coincheck’s hot wallet last week the hackers must have been ecstatic. In a single transaction they had pulled off the biggest digital heist of all time. Those smug grins swiftly gave way to frowns however as the thieves pondered the best way to offload their ill-gotten gains.

In the real world, there is no blockchain to monitor the movement of U.S. dollars in real-time. Laundering cash in small amounts is as easy as walking into a casino, and in larger amounts easier still if you have a cash-based business for that express purpose. But on the web, the blockchain sees and records everything, making it easy for observers to monitor the movement of stolen funds as they are disbursed. In the last few days, the NEM hackers have started moving their haul, but are encountering major difficulties in finding an exchange that will accept it.

Blacklisted on the Blockchain

In the wake of the Coincheck hack, NEM elected not to issue a hard fork to isolate the stolen coins and render them worthless. Instead it began contacting exchanges with the wallet address the stolen currency was sitting in, seeking to have it blacklisted. With 33 exchanges accepting NEM deposits, the hackers shouldn’t be short of options in theory. However, only eight of these recorded NEM trading volume of over $1 million in the last 24 hours. Laundering the proceeds, even if the hackers are able to find an exchange that will take them, could take some time. NEM’s Jeff McDonald told Reuters: “[The hackers are] trying to spend them on multiple exchanges. We are contacting those exchanges”.

Cryptocurrency is Harder to Launder Than Fiat Currency

In an effort to avoid scrutiny, the hackers have begun breaking the coins down into 100 XEM batches (currently worth around $55) in new wallets. Dividing 500 million coins into 100-coin bundles – even if automated – is a laborious process. It’s likely that some of the stolen NEM will enter circulation one way or another, but the chances of even 1% of the proceeds being laundered in such a manner seem remote. “I would assume that they are going to get away with some of the money,” conceded McDonald.

Laundering Crypto is Hard

Cryptocurrency is not the money launderer’s paradise it’s portrayed to be. Last week it was the turn of British Prime Minister Theresa May to break her silence on cryptocurrencies, predictably venturing that closer scrutiny was required “precisely because of the way they are used, particularly by criminals”. When Donald Trump’s Treasury Secretary gave his first comments on bitcoin back in November, it was to echo similar sentiments, saying:

The first issue is to make sure people can’t use bitcoin for illicit activities. So we want to make sure that you don’t have the dark web funded in bitcoins and that’s something that is a concern of ours today. So, if you’re a bitcoin dealer in the United States, you have the same know-your-customer requirements and BSA requirements.

When political leaders assert that cryptocurrency must be regulated due to money laundering concerns, what they really mean is “We’re largely powerless to prevent fiat currency laundering so we’re going to focus our efforts on cryptocurrency instead”. Due to the nature of public blockchains and the need to cash out into fiat, cryptocurrency is easier to monitor. All the noise about “anonymity” and criminals “hiding on the deep web” is just that. In reality, laundering red hot cryptocurrency, unless it’s a privacy coin like monero, is fiendishly tricky.

Cryptocurrency is Harder to Launder Than Fiat Currency

A recent report tracking the circulation of funds within the bitcoin economy from 2013 to 2016 concluded that less than 1% of bitcoin transactions stemmed from coins of illicit origin. In comparison, it is estimated that between 2% and 5% of global GDP – or $800 billion to $2 trillion – in U.S. dollars is laundered annually. Not only is cryptocurrency harder to launder at scale, but its prevalence is significantly lower than fiat currency. Just don’t expect your government to tell you that.

Do you think cryptocurrency is unfairly associated with money laundering? Let us know in the comments section below.


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Japan Unfazed By Recent Exchange Hack Realizing Cryptocurrencies Not to Blame

Japan Unfazed By Recent Exchange Hack Realizing Cryptocurrencies Not to Blame

Japanese investors are undeterred by the recent Coincheck hack and the general public is now more interested in cryptocurrencies due to the constant hype in the media. Bitflyer, Japan’s largest crypto exchange by volume, is seeing a rapid increase in the number of registered users. “Ironically, many people got interested in cryptocurrencies after this incident,” an executive of the exchange told news.Bitcoin.com.

Also read: Japan’s DMM Bitcoin Exchange Opens for Business With 7 Cryptocurrencies

The Aftermath of Coincheck Hack

Japan Unfazed By Recent Exchange Hack Realizing Cryptocurrencies Not to BlameIt has been a week since a major Japanese cryptocurrency exchange, Coincheck, was hacked for 58 billion yen (~USD$530 million) worth of NEM. While the exchange has promised to repay its 260,000 affected customers out of its own capital, no timeframe has been set and a class action lawsuit is being prepared by 5 lawyers.

Japan Unfazed By Recent Exchange Hack Realizing Cryptocurrencies Not to Blame
Haruhiko Kuroda.

Earlier this week, the Japanese Financial Services Agency (JFSA) issued a business improvement order to Coincheck and launched an investigation into all other crypto exchanges in the country for security gaps. On Friday, the agency conducted an on-site investigation of Coincheck. The Tokyo Police has also launched an investigation into the hack.

Haruhiko Kuroda, Governor of the Bank of Japan, on Thursday urged cryptocurrency exchange operators “to enhance security,” Japan Times reported and quoted him saying:

Providers of cryptocurrency services need to explain the risks to investors proactively and take sufficient security steps.

It’s the Exchange, Not Cryptocurrencies

Since April of last year, companies seeking to operate crypto exchanges in Japan must register with the JFSA. So far, 16 companies have been licensed including all of the major exchanges in the country except Coincheck, whose application has been under review by the agency for about 5 months.

Japan Unfazed By Recent Exchange Hack Realizing Cryptocurrencies Not to BlameEmphasizing that Coincheck does not have a license, Bitflyer CFO Midori Kanemitsu told news.Bitcoin.com, “now people understand that they need to use safe exchanges, which are registered with JFSA and have a high standard of security.” Bitflyer, Japan’s largest exchange by volume, was among the first 11 crypto exchanges to be licensed by the agency in September of last year.

Kanemitsu continued to share, “I don’t think there is a huge change after the [hack] news, however people [now] recognize the risk,” noting:

Ironically, many people got interested in cryptocurrencies after this incident as this has been reported so often and broadly in Japan…The number of new users [at Bitflyer] is increasing very rapidly after the news. This time people understand that this is due to the exchange and not due to cryptocurrency itself.

Coincheck Halts Merchant Service

Japan Unfazed By Recent Exchange Hack Realizing Cryptocurrencies Not to BlameCoincheck has previously claimed the largest market share of merchants accepting bitcoin in Japan. In January of last year, the company told news.Bitcoin.com that more than 5,000 merchants had signed up to accept the digital currency through its merchant service called Coincheck Payment.

The company partnered with Recruit Lifestyle Co. Ltd and announced in April of last year that 260,000 merchants using Recruit Lifestyle’s point-of-sale (POS) system, called Airregi, would start accepting bitcoin within months. However, by the end of last year, only some merchants reported having activated the bitcoin payment option.

Coincheck suspended its merchant service on January 27 at 17:00 Japan time in response to the NEM hack.

Merchants Still Interested in Crypto

Following Coincheck’s merchant service suspension, Airregi “stopped the bitcoin payment function voluntarily” and notified the merchants using its POS system of this decision, Business Insider Japan confirmed. Entertainment giant DMM.com, which also used Coincheck to accept bitcoin, told the news outlet that “The [bitcoin] payment acceptance by our company has also been suspended due to the suspension of Coincheck Payment.”

However, Kanemitsu told news.Bitcoin.com:

We don’t see any discouragement as of now due to Coincheck’s news. Some merchants using Coincheck wallet stopped [accepting] cryptocurrency payments. But they would like to continue crypto payment, so some of them are coming to us.

Bitflyer has also been helping merchants accept bitcoin, including Bic Camera and Yamada Denki, two of Japan’s largest consumer electronics chains.

What do you think of how the Japanese are responding to the Coincheck hack? Let us know in the comments section below.


Images courtesy of Shutterstock, Coincheck, Wikipedia, and Bitflyer.


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Bungling Bitcoin Thieves Foiled by Quick-Witted Trader

Bungling Bitcoin Thieves Foiled by Quick-Witted Trader

Last week mainstream media reported on Britain’s first armed bitcoin robbery. Thieves were said to have broken into the home of high profile trader Danny Aston, tied up his girlfriend, and forced him to transfer his vast cryptocurrency holdings. It turns out that the audacious thieves didn’t get away with so much as a satoshi after the quick-thinking victim fooled them into believing he had transferred the funds.

Also read: U.S. Regulators Send Tether and Bitfinex Subpoenas

Do You Even Blockchain?

Bitcoin heists are different from conventional robberies in that there are no material goods to flee the scene with. In every other respect though they bear all the hallmarks of a classic heist: masked men, guns, the element of surprise, kidnapping, threats of violence, and actual violence. Last week’s story of city trader and crypto adopter Danny Aston was a familiar tale which may have been a UK first, but globally was nothing new. Thieves have been attracted to wealth since time immemorial, and whether those riches appear in digital or analogue form makes little difference. Crypto; gold; jewelry; it’s all good.

There’s a coda to this particular story though which makes it worthy of closer scrutiny: in the end the thieves – three black, one white – got away with nothing because the victim, despite having his partner tied up and their young child placed outside in a buggy, duped the attackers into thinking they’d received his crypto. Quite how he achieved this feat is a matter for debate; one possibility is that he set the fee too low for the transaction to be mined. The replace-by-fee option which some wallets offer, for example, also allows for the destination address to be changed after the fact. Brave or foolish, the move paid off and thus, if reports are to be believed, Mr. Aston still has his cryptocurrency riches while the thieves have nothing to show for their efforts bar a major police investigation.

Bungling Bitcoin Thieves Foiled by Quick-Witted Trader
Oxfordshire, England

Desperate Times Call for Desperate Measures

Regardless of the wisdom of 30-year-old Danny Aston’s flash decision, it’s paid off. The city trader still has his fortune and has hopefully since beefed up his op-sec, both in his $1.1 million rural home and in terms of securing his digital assets. While most cryptocurrency holders aren’t likely to be threatened by armed gangs, the case illustrates the value of establishing security measures that can thwart a range of attack vectors. Any funds that are stored in a hot wallet – i.e one that can be accessed instantly by a single entity – are at risk.

That’s what happened last week to Coincheck, when the Japanese exchange, having failed to implement multi-sig, had its NEM wallet relieved of $400 million of cryptocurrency. And it’s what appeared to have happened to Danny Aston, a resident of the upscale Oxfordshire village of Moulsford, until it emerged that the heist hadn’t gone to plan. A local police spokesperson said: “It’s correct to say that the attempted transaction of bitcoins failed.”

Keep It Locked Down and On the Lowdown

Bungling Bitcoin Thieves Foiled by Quick-Witted TraderThe importance of being discreet when it comes to disclosing cryptocurrency involvement has already been drummed into most bitcoiners. This particular incident serves as a prime opportunity to reiterate a number of home truths. For one thing, crypto that is in cold storage – be it on a hardware wallet in a bank vault or under the control of multi-sig – is immune from opportunistic home invasions. In addition, Ledger and Trezor both offer advanced passphrase options. That way, even if forced to hand over your cryptocurrency, you can unlock a false address that contains mere shrapnel.

As for Mr Aston, he may have won this particular battle, but now the whole world knows he’s still sitting on a sizeable stash of cryptocurrency. If he’s to win the war, he’ll need to bolster his security and take measures to emphasize that he no longer has instant access to vast amounts of crypto. The Englishman got of lightly on this occasion. Next time he might not be so fortunate.

What do you think is the best defense against home invasions? Let us know in the comments section below.


Images courtesy of Shutterstock.


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Coincheck to Repay Hack Victims’ XEM Balances at 81 U.S. Cents Each

Coincheck to Repay Hack Victims' XEM Balances at 81 U.S. Cents Each

Major Japanese cryptocurrency exchange Coincheck has announced that it will reimburse the accounts of the 260,000 customers who lost XEM tokens in a recent hack at a rate of roughly 81 U.S. cents per unit. As of this writing, XEM is trading for approximately 89 U.S. cents, having recovered slightly from its dip in the wake of the hack. The announcement comes amid concerns expressed by Japan’s Financial Services Agency (FSA) that it is uncertain as to whether Coincheck possesses sufficient funds in order to conduct the reimbursement.

Also Read: Japanese Crypto Exchanges Strengthen Self-Regulation Following Coincheck Hack

Coincheck Announces Reparations Policy

Coincheck to Repay Hack Victims' XEM Balances at 81 U.S. Cents EachOn the 26th of January, a total of 523,000,000 XEM was “illicitly transfer[ed]” following a hack sustained by Coincheck. The exchange has announced that the approximately 260,000 affected users “will be repaid in JPY via Coincheck Wallet” at a rate of “88.549 JPY” for each coin held (approximately 81 US cents each).

The price has been calculated “using the weighted average of turnover […] during the period beginning with the suspension of [the] sale of NEM on the Coincheck platform and ending with the release of this notice” (01/26/2018 12:09 JST – 01/27/2018 23:00 JST) using Zaif’s XEM/JPY pairing. Based upon the current price listed on Coinmarketcap of approximately 89 U.S. cents, the reimbursement will comprise a loss of 9% for affected users. The exact date for the distribution of the reparations has not yet been decided.

FSA Expresses Concerns Regarding Coincheck’s Ability to Repay Stolen XEM Balances with JPY

Coincheck to Repay Hack Victims' XEM Balances at 81 U.S. Cents EachCoincheck has stated that it “will do [its] utmost to enact meaningful changes to [its] platform” following the company receiving “an order to improve business operations from the [FSA].”

The FSA has demanded that Coincheck conduct an “investigation of the facts and causes surrounding the [hack], a “strengthening of current measures to manage system risk,” in addition to providing “proper support of [its] customers.” The FSA has requested a written report addressing the aforementioned concerns before Tuesday, February 13, 2018. The FSA has also recently expressed uncertainty as to whether or not Coincheck possesses the funds required to conduct its planned reparations.

What is your reaction to Coincheck’s proposed repatriations policy? Share your thoughts in the comments section below!


Images courtesy of Shutterstock, Coincheck


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Japanese Crypto Exchanges Strengthen Self-Regulation Following Coincheck Hack

Japanese Crypto Exchanges Strengthen Self-Regulation Following Coincheck Hack

Japanese cryptocurrency exchanges are strengthening their self-regulation procedures following the hack of one of the country’s largest crypto exchanges, Coincheck. The Japanese Financial Services Agency has yet to approve Coincheck’s registration as a crypto exchange.

Also read: Japan’s DMM Bitcoin Exchange Opens for Business With 7 Cryptocurrencies

Strengthening Self-Regulation

Japanese Crypto Exchanges Strengthen Self-Regulation Following Coincheck HackThe Japan Blockchain Association (JBA) has previously established self-regulation standards which its cryptocurrency exchange members voluntarily adopt. The standards include “the maintenance of cold wallet, etc., under the consent of the related members,” the association announced on Saturday after one of its members, Coincheck, suffered a hack which led to an approximately 58 billion yen loss on its platform.

The association currently has 127 members, 15 of them are crypto exchange members and 35 are blockchain members. Among crypto exchange members are Bitflyer, Coincheck, GMO Coin, and Bitocean. Bitflyer CEO Yuzo Kano is the association’s representative director. According to the JBA’s announcement:

The fact that the maintenance of the cold wallet was delayed caused the current illegal outflow. It is very regrettable.

Japanese Crypto Exchanges Strengthen Self-Regulation Following Coincheck HackThe association noted that the Japanese Financial Services Agency (FSA) has alerted the representatives of each cryptocurrency exchange regarding their security. “We are looking for further measures,” the JBA emphasized, adding that its crypto exchange members have been told to “check the status of [their] security based on the possibility of cyber attack.” The association noted:

In the future, in order to appropriately secure the security of virtual currency exchange traders…we will establish stricter voluntary regulations and seek compliance with members.

FSA’s Concerns About Coincheck

According to Japan Times, the FSA had urged Coincheck to “address security concerns about the way it manages customer assets before Friday’s ¥58 billion theft of NEM tokens.” The publication quoted informed sources asserting:

As part of questionnaires issued in late August, the FSA asked exchange applicants how their assets were distributed in the two types of accounts [cold and hot wallets]…After the company [Coincheck] filed for registration in September, the FSA highlighted the risk of unauthorized accesses taking place in its computer system and urged it to strengthen security.

The financial authority usually takes two months to approve an application for a cryptocurrency exchange, the news outlet noted, pointing out that Coincheck’s application has already been under review for four months after its filing.

According to Reuters, the FSA has ordered Coincheck to submit “an incident report and measures for preventing a recurrence” by February 13. In addition, the agency may “conduct on-site inspections of other exchanges,” the news outlet noted. Furthermore, the Tokyo Metropolitan Police Department will launch an investigation into the exchange’s hack.

What do you think of Japanese exchanges’ self-regulation and Coincheck hack? Let us know in the comments section below.


Images courtesy of Shutterstock, the JBA, and Japanese FSA.


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Coincheck Faces Pressing Questions in the Wake of the World’s Biggest Hack

Coincheck Faces Pressing Questions in the Wake of the World’s Biggest Hack

It was, by any reckoning, a huge haul. Between $400 million and $534 million dollars of NEM stolen, depending on whether you go on its value at the time or once the market had reacted to the news. At a press conference on Friday afternoon, the stunned Coincheck team painted forlorn figures as they came to terms with being on the receiving end of the greatest heist of all time. In the inevitable post-mortem, questions have been raised about the security practices of the Japanese exchange.

Also read: Coincheck Halts Operations Amidst Hacking Rumors

Gox II: Goxxed Harder

Coincheck Faces Pressing Questions in the Wake of the World’s Biggest HackJapan thought its days of being the focal point for record-breaking cryptocurrency heists were behind it. Less than four years on from the Mt Gox hack, which heralded the end of Japan’s and the world’s largest exchange, the country is back in the spotlight. Over the past few years, Japan has earned praise for its measured approach to cryptocurrencies, having encouraged their use in a regulated environment. Only this week, the Bank of Japan gave crypto a mild endorsement. But on Friday January 26, the nation’s 127 million citizens awoke to the news that another seismic cryptocurrency hack had occurred on home soil. At around 3am local time, someone withdrew all of the NEM held by the exchange in a single transaction.

The identity and origin of the hacker is unknown at this time, but what few details have emerged suggest serious flaws in Coincheck’s security procedures. It appears that the 500 million NEM were stored in a hot wallet with no multi-sig. If so, the exchange has learned nothing from recent history, for it was a similar setup that resulted in Mt Gox losing around 850,000 bitcoins in 2014. At a press conference on Friday, when asked about Coincheck’s security practices, there was an awkward pause before president Wakata Koichi Yoshihiro batted the question away, electing to issue an apology instead.

The Coincheck Hack by Numbers

The magnitude of the Coincheck hack, a haul which exceeds any other, can be seen by comparing it alongside real world record-breakers.

Securitas Depot Robbery, $83 million: Disguised in wigs and prosthetics, a gang did over a security depot in Britain in 2006. They would have made off with more, only there was no more space for cash in the lorry. The Securitas robbery was worth one sixth of the NEM hack.

Knightsbridge Security Deposit Robbery, $97 million: A safety depot raid in London in 1987 netted a huge load of cash and jewelry but it was still only worth a fifth of the NEM cryptocurrency hack.

Coincheck Faces Pressing Questions in the Wake of the World’s Biggest HackBaghdad Bank Heist, $282 million: Iraq’s Dar Es Salaam bank was relieved of hundreds of millions of dollars in 2007, with two guards alleged to be the instigators. The bumper robbery was worth around half the NEM stolen from Coincheck.

Mt Gox, $450 million: The tranche of bitcoins stolen from the world’s largest cryptocurrency exchange in 2014 was worth around $80 million less than the value of NEM that was taken.

An Irredeemable Fortune

In reality, the thief may find themselves struggling to shift their hot property. Within hours of the attack occurring, the NEM team had contacted cryptocurrency exchanges seeking to have the wallet address blacklisted. One thing NEM won’t be doing is emulating Ethereum and hard-forking. If the blockchain were to be rolled back and the stolen coins forked away, it would do Coincheck a favor, but would do little to demonstrate the immutability of blockchain ledgers.

Coincheck Faces Pressing Questions in the Wake of the World’s Biggest Hack
NEM’s president is against a hard fork.

Japan’s Financial Services Authority has confirmed it is “looking into the facts” surrounding the matter. Meanwhile, Coincheck has promised that it is seeking to compensate its customers who had their NEM stolen. Despite its hefty dollar value, the NEM hack is unlikely to put a discernible dent in the cryptocurrency markets. It raises serious questions though about Coincheck’s fitness to operate a cryptocurrency exchange.

Coincheck Faces Pressing Questions in the Wake of the World’s Biggest Hack

The company had previously reported being approved by the Financial Services Agency, but it’s emerged that Coincheck was not registered with the FSA. The only way for Coincheck to pay back its customers may be for it to be allowed to continue trading. Whether regulators will allow the beleaguered exchange to stay in business – and whether customers will trust it again – is another matter entirely.

Do you think Coincheck should keep trading or wind up its operations? Let us know in the comments section below.


Images courtesy of Shutterstock, Twitter, and Coincheck.


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The post Coincheck Faces Pressing Questions in the Wake of the World’s Biggest Hack appeared first on Bitcoin News.

Japanese exchange says hackers stole over $400M in cryptocurrency

 A Japanese cryptocurrency exchange has claimed it lost more than $400 million in tokens following an alleged hack on its service. Coincheck said Friday that some 500 million tokens of NEM, worth around $400 million at the time of writing, according to comments at a press event attended by Bloomberg. NEM, the tenth largest cryptocurrency based on total coin market cap, is a distributed… Read More