Japan's regulator urged Coincheck to fix flaws before $530 million cyber theft - <b>Technical Lobby</b>

Saturday, February 3, 2018

Japan's regulator urged Coincheck to fix flaws before $530 million cyber theft

Japan's regulator urged Coincheck to fix flaws before $530 million cyber theft
TOKYO: Japan's financial regulator on Friday swooped on Coincheck Inc with surprise checks of its systems and said it had asked the Tokyo-based Coincheck to fix flaws before $530 million cyber theft exchange to fix flaws in its computer networks well before hackers stole $530 million of digital money last week.

Security gaps in Coincheck's systems were among the reasons the exchange had not been given official approval to operate, the Financial Services Agency said. Coincheck had been allowed by the regulator to operate pending registration.

The comments came after 10 FSA officials conducted surprise checks on Coincheck's office on Friday morning, as authorities stepped up efforts to pin down how hackers pulled off one of the world's biggest cyber heists.

The inspection, launched at 8 a.m. on Friday (2300 GMT Thursday), focused on compensation for customers, financial conditions and system management at the exchange, and Coincheck's efforts on consumer protection, a senior FSA official said.

Coincheck had been ordered to submit a report on the hack and measures for preventing a recurrence by Feb. 13. But Friday's surprise inspection was conducted ahead of the deadline to "ensure protection of users," Finance Minister Taro Aso told reporters.

The FSA has already conducted an interview-based hearing with Coincheck but questions remain, a source with direct knowledge of the matter told Reuters on Friday.

In 2014, Tokyo-based Mt. Gox, which once handled 80 percent of the world's bitcoin trades, filed for bankruptcy after losing bitcoins worth nearly half a billion dollars to a hacking attack. More recently, South Korean cryptocurrency exchange Youbit shut down and filed for bankruptcy after being hacked twice last year.


Coincheck said on Sunday it would repay about 46.3 billion yen ($425 million) of the virtual money. The FSA has said it had yet to confirm whether the company had sufficient funds for the reimbursement.

Coincheck has turned over communication records to police in Tokyo investigating the heist, the Nikkei business daily said on Thursday. A Tokyo Metropolitan Police Department spokesman declined to comment.

Bitcoin extended its slide to $8,639 on Friday after skidding a day earlier to as low as $9,022 on the Luxembourg-based Bitstamp exchange, less than half the peak price of almost $20,000 it reached in December.
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