The Financial Services Authority of Japan has imposed penalties on three cryptocurrency exchanges following inspections of trading platforms in the country. Two of them have been ordered to suspend operations. Officials are not satisfied with the measures implemented to prevent money laundering and systemic risks.
Also read: CEO of Korean Exchange Coinnest among Four Arrested for Fraud
FSHO, Eternal Link Suspended, Lastroots Told to Improve
The sanctioned crypto platforms – FSHO, Eternal Link, and Lastroots – have received orders to improve their business practices. These were issued by Japan’s financial regulator as part of the ongoing inspections of cryptocurrency exchanges. According to the Financial Services Authority (FSA), the penalties have been imposed because of unsatisfactory procedures to prevent money laundering and minimize systems risk.
The Japanese financial regulator has ordered two of the trading platforms to suspend their operations for two months. Eternal Link should halt activities from Friday, April 6, and FSHO was told to do the same on April 8, Reuters reports. Lastroots has received an order to improve its practices. Japan’s Minister of Finance is expected to present the full results of the investigations carried out by the FSA.
In March, FSA suspended two exchanges – the Nagoya-based Bit Station and again FSHO, which was ordered to terminate services until April 7. The agency said its operator was not performing thorough checks on large-scale transactions and had not implemented necessary measures “to run the exchange in a decent and assured way”. According to Japanese press, Bit Station was penalized because its senior officials were implicated in embezzlement of clients’ crypto deposits. Similar charges have led to the arrests of four high-ranking representatives of two cryptocurrency exchanges in South Korea.
In early February, FSA said it was inspecting all crypto trading platforms in the country, including 16 that were not registered at the time of the announcement. The financial authority published a list of 32 crypto exchanges, half of which had already obtained licenses to provide cryptocurrency exchange services.
Aftermath of a Huge Hack
Japan’s financial regulator undertook the revisions in the wake of the attack on Coincheck in January. Hackers stole ¥58 billion worth of NEM (~$550 million USD) from the Japanese exchange. Authorities are still investigating the heist, one of the biggest in crypto history. Cybersecurity experts have warned that half of the stolen NEM coins might have been laundered already on the darknet.
Cryptocurrency theft has become a major security issue in Japan, part of the growing cybercrime trend. Last year alone, $6.3 million worth of cryptocurrency was stolen, and that’s before the Coincheck hack.
Japanese authorities have decided to set up a center dedicated to combatting cybercrime, including crypto theft. 500 analysts and investigators from different branches of the country’s law enforcement agencies have joined the unit. At least 149 crypto-related attacks took place in 2017, Japan’s National Police Agency recently revealed.
Earlier this week, news came out that Tokyo-based Monex Group was considering buying Coincheck. On Friday, the deal with the online financial brokerage was confirmed. The team behind the hacked exchange has accepted the acquisition bid worth ¥3.6 billion Japanese yen (~$33.6 million USD).
Do you expect more cryptocurrency exchanges to be suspended by Japanese authorities? Share your thoughts on the measures taken by the FSA in the comments section below.
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