Published: Fri, February 16, 2018
Money | By Armando Alvarado

Japan's Coincheck set to report to regulators over $530 million cryptocurrency heist

Japan's Coincheck set to report to regulators over $530 million cryptocurrency heist

At issue in the lawsuit is Coincheck, a Tokyo-based cryptocurrency exchange, and its decision to freeze all withdrawals after it fell victim of a security breach that resulted in more than $530 million of NEM tokens being stolen from traders.

Coincheck earlier submitted a report to the Financial Services Agency explaining how the hack occurred, what kind of support will be provided to customers and how systems will be bolstered to prevent future hacks, the company said in a separate statement. Further details on the report were not immediately available.

Coincheck said on Friday it would allow customers to withdraw yen after confirming the integrity of its system security. According to some media reports, in the first day of fiat withdrawals, Coincheck clients withdrew the JPY equivalent of $373 million. The exchange will hold a press conference at 8 p.m. local time (1100 GMT), the person familiar with the matter said.

He declined to comment on whether the FSA had verified that Coincheck has enough funds for the repayments.

The huge hack on Coincheck last month has highlighted major flaws in Japan's regulating of cryptocurrency trading and raised questions over the country's dash to oversee the industry as opposed to imposing clampdowns on it, like policymakers in South Korea, China, and India.

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Coincheck suspended customer withdrawals of yen and all cryptocurrencies after the hack of 58 billion yen ($532 million) worth of the NEM cryptocurrency came to light on January 26.

Meanwhile, a group of traders are set to file a lawsuit against Coincheck on Thursday, Reuters reports.

The traders will request that Coincheck allows them to withdraw cryptocurrencies to "wallets" - folders used for storing digital money - outside the exchange, Mochizuki said.

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". Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication. It is not a solicitation to make any exchange in commodities, securities or other financial instruments.

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