Japanese Exchanges to Firm Regulation, Face Gov’t Probes After $530 mln Hack

Japanese Exchanges to Firm Regulation, Face Gov’t Probes After $530 mln Hack

A few days ago it was revealed that 500 million NEM, which is approximately $530 million, had been thieved from the Tokyo-based cyber money trading platform Coincheck. The alleged reason of what is estimated to be the most extensive theft in the history of digital assets was a cyber-attack. After that, other Japanese exchanges started reinforcing their self-controlling policies. In the meantime, Coincheck remains unrecognized as the trading platform by Japanese authorities.

Hot N Cold

Japanese cyber-coins exchanges, as well as other terms of the virtual money community, are calling for the broader adoption of cold wallets as they are held online and are difficult for hackers to access, on the contrary to hot wallets.

On January 27, on the very next day after Coinchek’s executives announced the tragic hack, the Japan Blockchain Association announced that it set out recommendations for its members to adhere to. Among them, apparently, was the advice to use cold wallets. Interestingly, Coincheck experienced a vast theft only because it kept a massive amount of funds insecure hot wallet, losing about $530 million.

“The fact that the maintenance of the cold wallet was delayed caused the current illegal outflow. It is very regrettable,” stated the JBA announcement.

Coincheck, by the way, is the member at JBA, but except it, there are other 14 exchange terms, e.g., bitFlyer, Bitocean, as well as GMO Coin. On top of that, the association includes 35 blockchain and lots of others, with 127 members in total. The organization turned to all its members with the request to check out their security state so as to prevent any hacking.

‘A danger foreseen is a danger avoided’

The enormous Coincheck theft urged dozens of other crypto community members to check out their security conditions. But why Coincheck on its own did not try to prevent a danger? Notably, Japanese authorities, The Financial Services Agency, in particular, had induced the affected platform Coincheck to solve its security problems before that cyber-attack occurred.

Back in September 2017, Coincheck applied for registration as an exchange, and that was the time when FSA pointed out at its safety flaws. As it can be seen now, the platform did not try to do anything about the breaches, and the consequences are devastating.

Now, Coincheck will have to improve its operations in the care of the country’s authorities, while other platforms will be investigated with a view to reliability, according to Reuters.