Japan’s financial watchdogs penalises some cryptocurrency exchanges

Written by: Michael Harris
March 11, 2020

Japan’s Financial Services Agency has issued month-long suspensions to two cryptocurrency exchanges, as part of a wave of punitive measures against local platforms handling digital currency trading. The news confirm earlier reports about the FSA plans, which rattled the market during yesterday’s afternoon session.

The platforms, FSHO and BitStation, were ordered to halt their operations to halt their operations for a month, starting from today, Japanese publication Nikkei Asian Review reported. At BitStation, the regulator discovered that one of the company’s senior staff members had diverted customer Bitcoins for personal use, the report said. Additionally, the FSA has issued business improvement orders to five other operators – Tech Bureau, GMO Coin, Bicrements, Mr. Exchange and Coincheck.

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Two of the operators, Tech Bureau and GMO Coin, are registered with the Japanese authorities, while the other five are unregistered. Coincheck is the cryptocurrency exchange lost more than $500 million worth of NEM tokens in a hacking attack on January 26. Since the incident, the company has received two regulatory notices to raise its business standards, including the one issued today.

Following the Coincheck hack, the FSA launched a probe into both registered and unregistered crypto exchange to check for security flaws that could enable money laundering or endanger customers’ funds.

In total, Japan has 16 registered and 16 unregistered crypto exchanges. Companies in the latter group have been allowed to operate while they seek official recognition, because they existed before legislators made registration mandatory.

According to Nikkei, BitStation, as well as BitExpress and Raimu – two operators that were not among those penalised today – have withdrawn their applications for registration. This means that the three companies will now have to return funds or cryptocurrencies they hold on behalf of their customers and shut down.