Japan Barely Affected by Coincheck Hack
After the recent major hack on the Japanese crypto exchange Coincheck, many of the Japanese investors remained unalarmed. Ironically enough, even more people have started showing an interest in cryptocurrencies after the hack, as demonstrated by the quick growth in the number of users registering on Bitflyer – the largest and most popular exchange in Japan at the moment.
Coincheck has suffered one of the most notorious hacks in the history of cryptocurrencies. An amount of about $530 million worth of NEM was stolen. This is more than the amount stolen from Mt Gox in February 2014 (in Bitcoin), which valued about $450 million at the time. The hack has pushed the Japanese Financial Services Agency into running thorough investigations on the security gaps on crypto exchanges.
The companies that want to operate as crypto exchanges in Japan must register with the JFSA. Many of the exchanges have been licensed since April 2017, when the law was first approved. However, Coincheck isn’t among them, and their application has been under review for almost half a year. Despite Coincheck’s lack of license, the JFSA did not order the exchange to shut down. Coincheck’s representatives did not give any comments about the exchange’s lack of license but stressed the fact that they will continue to improve the security measures, and will repay all affected users from their own capital.
While the hack has caused tremendous loss to over 260,000 Coincheck users and to the exchange itself, Bitflyer’s CFO, Midori Kanemitsu, commented that this case has offered them a lot of valuable information about the importance of security measures when it comes to crypto exchanges.
Prior to the hack, Coincheck was one of the leading cryptocurrency exchanges in Japan. Aside from trading, they had been working with most Japanese companies that accept Bitcoin payments. The company cooperated with Recruit Lifestyle Co. Ltd, which helped them implement their point-of-sale scheme. However, the project was only half successful, as only a few businesses have started accepting Bitcoin payments through the platform, and the service was shut down after the hack occurred. Many other Japanese exchanges have been trying to help merchants accept Bitcoin payments. For instance, BitFlyer cooperated with some of Japan’s biggest trade companies, including Yamada Denki, to help them implement Bitcoin payment processing systems.
Although the Coincheck incident was a hard hit for the community, it hasn’t turned Japanese investors and casual users away from the cryptocurrency hype. If Coincheck manages to refund all the affected users and improves their security measures, that might convince even the most skeptical of people that cryptocurrencies are not just a big money laundering scheme, but a worthy investment vehicle.