Japan’s Financial Service Agency Raids Coincheck to Ensure Safety for Clients Assets

Japan’s Tokyo-based Coincheck exchange is really having a tough time for the moment, after it lost $500 million of NEM tokens over the last weekend. Last weekend, the exchange reported one of biggest hacking loss in the history of cryptocurrency markets.

Japan’s financial watchdog the Financial Service Agency (FSA) quickly started the investigation post the hack and has slapped the Coincheck management for having sloppy and compromised security in protecting the user-accounts.

The FSA has also sought an explanation from the exchange by Feb 13, wherein it has been asked to submit a detailed report on the causes of the hack. Moreover, the FSA has also asked the exchange to take immediate action at their end to resolve the service, protect the customer’s assets and strengthen the risk management while taking necessary preventive action.

In a fresh new development, the FSA raided the Coincheck exchange office on Friday, Feb. 2 while checking out all the documents and computer data for any evidence to be available. As reported by Bloomberg around 10 FSA officials entered the Coincheck premises in order to get a better understanding of the exchange’s operations. Japan’s Finance Minister Taro Aso said: ”We have launched an on-site inspection to ensure preservation of clients' assets.”

Coincheck has made it clear that it will reimburse all the 26,000 affected customers who have been a victim of this hack. The customers will receive this amount at a rate of 88.549 yen per NEM, and the refund will also be made in fiat currency yen and not in virtual tokens.

Also, during the ongoing investigation and tracking of the stolen funds, the NEM Foundation, the issuer of the XEM tokens used by Coincheck, found that the hackers are trying to move the stolen XEM tokens. The foundation has traced the stolen coins being moved to an unidentified account. Jeff McDonald, founder of NEM, while talking to Reuters said that the hackers were moving the coins to six different exchanges. “[The hackers are] trying to spend them on multiple exchanges. We are contacting those exchanges,” he said.

NEM Foundation spokeswoman, Alexandra Tinsman said that the hackers are transferring the stolen “XEM” tokens to random accounts in batches of 100, each worth $83. Tom Robinson, co-founder of Elliptic, a cryptocurrency security firm in London said: “When people look to launder these types of funds, they sometimes spread it into smaller transactions because it’s less likely to trigger (exchanges’) anti-money laundering (mechanisms).”