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Japan's Hacked Crypto Exchange Coincheck Begins Customer Repayments


Coincheck, the Japanese cryptocurrency exchange that fell victim to a massive hack in January, began repaying its customers affected by the incident.

The Tokyo-based crypto exchange, which has been under the regulatory scanner since the hack, also announced that it would resume withdrawals and sales of cryptocurrencies including Etherum, Ethereum Classic, Ripple, Litecoin and Bitcoin Cash.

Bitcoin sales were exempt from the temporary suspension imposed after the hacking incident on January 26, while withdrawals were halted.

On January 26, it emerged that 523 million NEM coins, worth 58 billion yen or $531 million then, were stolen from Coincheck. The hack was bigger than the one in 2014, when over $450 million worth of Bitcoins were stolen from the Shibuya, Tokyo-based Mt. Gox, which at the time was the world's biggest bitcoin exchange. The hack led to the collapse of Mt. Gox.

The company had said it will repay the nearly 260,000 affected users in Japanese yen.

On March 8, Coincheck CEO Koichiro Wada said the exchange would repay about 46 billion yen or $434 million to affected investors from this week.

The hacking incident at Coincheck, which is not registered with the Financial Services Agency, prompted authorities to monitor these exchanges strictly.

Japan has 16 registered cryptocurrency exchanges and about the same number is waiting for approval.

The country is among the first in the world to implement a registration system for cryptocurrency exchanges.

The government had implemented a rule in April 2017 that required cryptocurrency exchanges to register with the FSA.

Following the Coincheck hack in January, the FSA reportedly asked cryptocurrency exchanges to report on systems including asset management, corporate governance and security. Authorities also raided several exchanges.

Japan's FSA had ordered Coincheck to study the security flaws and beef up its protective measures, and report back by February 13.

The company announced that it has delivered a report to the watchdog that includes a probe into the facts and causes of the hack, support offered to customers, steps taken to strengthen measures to deal with system risk, and creation of new measures to enhance security.

Coincheck announced on February 9 that it has confirmed the security of its system with the help of outside experts, which it reiterated on Monday.

However, in a crackdown on cryptocurrency exchanges, the FSA on March 8 ordered crypto exchanges including Coincheck to improve their system security measures and submit a written improvement plan by March 22.

by RTT Staff Writer

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