Please view the main text area of the page by skipping the main menu.

Coincheck to compensate users in digital money theft next week

Coincheck president Koichiro Wada, left, and COO Yusuke Otsuka bow in apology at a news conference in Tokyo's Chiyoda Ward on March 8, 2018. (Mainichi)

TOKYO (Kyodo) -- Coincheck Inc., the Tokyo-based operator at the heart of a massive digital money theft, said Thursday it will start reimbursing its customers possibly next week and blamed a computer virus infection for the cryptocurrency loss.

The exchange, which has promised to compensate holders of the stolen cryptocurrency NEM to the tune of 46 billion yen, also said it will resume part of its business.

The announcement came on the same day Japan's financial watchdog took administrative action against seven digital currency exchanges across the country, ordering two of them to suspend business in the first such penalty against cryptocurrency exchanges.

For the second time, the Financial Services Agency slapped a business improvement order on Coincheck. It judged that risk management and consumer protection at Coincheck were insufficient.

Following the latest order, Coincheck CEO Koichiro Wada apologized again at a press conference for causing trouble. "We will make all out efforts to respond sincerely to the instructions of the FSA," he said.

When asked about what led to the theft, Wada said, "I was trying to increase the number of our workers and enhance our internal management system but was unable to hire new personnel."

Wada refrained from saying whether he will step down as CEO to take responsibility over the incident but did not rule out resigning.

For preventive measures, the exchange said it now has a person who oversees its system security and has launched a system risk committee to enhance the management of information security. Coincheck also pledged to boost its internal auditing system.

The FSA also ordered two virtual currency exchange operators -- Bit Station and FSHO -- to suspend business for a month through April 7 and enhance protection of customer information or assets.

An executive who is a major shareholder in Bit Station misappropriated bitcoin held by its customers, according to the FSA.

The seven operators were required to report back on how to improve their business operations by March 22. The other operators are Bicrements Inc., GMO Coin Inc., Tech Bureau Corp., and Mr. Exchange Inc.

Since the theft of 58 billion yen (about $543 million) worth of digital money from Coincheck in January, the FSA has been stepping up monitoring of virtual currency exchanges through on-site inspections and checking whether they have steps in place for their customer protection and anti-money laundering.

The latest heist from Coincheck came amid the growing popularity of virtual currencies and sparked debate about whether and how to regulate them.

Japan requires all virtual currency exchange operators to register with the government.


The Mainichi on social media