Japan Closes Two Crypto Exchanges, Cites Several More - More Explanation For Bitcoin Weakness?

in bitcoin •  9 months ago

In news that could explain part of Bitcoin's recent drop, Japan just shuttered 2 cryptocurrency exchanges and issued "punishment notices" to 7 more for a variety of violations ranging from security infractions to failure to properly follow money laundering regulations.

The two exchanges that are to be closed for a one month period are "Bitstation" and "FSHO", neither of which I have any knowledge about beyond a (very) passing familiarity with their namesake. I suspect this will not be the event to set their destinies aflame.

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These actions were the result of inspections having been conducted on the security practices of all Japanese cryptocurrency exchanges after "Coincheck", another Japanese exchange, was hacked in January resulting in the theft of approximately$500 million in and froze all user withdrawals. Apparently the relevant coins were being held in a hot-wallet (derp) by the exchange, so their inability to avoid a citation for mishandling security procedures was not unexpected.

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As you can see above, Bitcoin is having a rough day on this news.

It's actually a relief that one of the more stable of modern governments is actually conducting security audits on exchanges to reveal vulnerabilities, as there is not a great deal of short-term profit motive for exchanges to do this on their own. Given the infancy of this entire industry and the lack of regulation, many exchanges are no doubt taking a "don't ask, don't tell" approach to their security measures which is quite terrible for the average consumer. That's how you end up with Mt Gox.

Unfortunately, at least on of the things exchanges were cited for (including Coincheck) was "the proper and required internal control systems" - or, in simpler terms, problems relating to Know Your Customer laws and the prevention of money laundering. I'm sure tax evasion is also on their list, so generally speaking, not something the end user has reason to be too enthused about.

The severity of the drop on this news breaking was bad, but it could have been much worse. There is speculation that some players were forewarned about this development, explaining some of the more severe drop from several days ago. Since no evidence has been offered in support of this theory, and these sorts of predictions are never in short supply, I can only conclude that while likely true in some small degree, there is no way to prove any correlation with the currently available data.

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Sources: Google
Copyright: CoinTelegraph, @anahowa210

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Looking forward to all this FUD ending. Crypto is so much more fun in growth mode.

In the long run, better compliance management will ensure the sustainability of the crypto market. Checks and balances are needed, though many will continue to dismiss this as FUD; the reality is that projects/services which implement holistic quality practices will have a better shot at outlasting those that don't.

One could expect this to apply to all levels of product development, including marketing. As we see in other regulated industries, consumer protection considerations can boil down to something as seemingly simple as a brand's name; the potential applicability of this to how forks of existing blockchain projects market themselves immediately comes to mind. Will be interesting to see how all of this develops in the crypto space.

Hope it doesnt spread to rest world! Great article

The last few days have been very bad for crypto... I guess this is a good time to buy then!

A lot of coins are looking very cheap right now, steem below 3

:O

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I don't think any of these hits are too substantial. They shouldn't drag on the market long-term, unless they paint a new trend.

what good information I had read a little about the closing of the exchanges but you clarified me much more about the topic, thanks to your contribution

There isn't weakness with Bitcoin. Patience will prove this to those that don't believe it! We just have to wait some time and those that are holding onto their crypto assets will hopefully be very happy!

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The weakness is staring at your right from the charts. Again, today. It's not up for debate.

I hadn't heard about this today. It makes sense that this would effect the market. I think you are right that it could have been worse. I think it will blow over in a couple weeks and we will be on the rise

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It is now worse, unfortunately.

greetings from venezuela I follow and vote

Its no longer funny oo,whatever the reason maybe,they should resolve this oo,it has been on decline and investors are not finding it easy!Thanks for the update.

Being audited and regulated is good. It is our safety measure.

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Depends on who is doing it!

Can't help ;-p
Good time to buy though.

Really great information nice post thanks for sharing sir...resteemed @lexiconical

I read that the two exchanges combine had a few $100k volume combined. Any drop in price is purely FUD.

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If true, this is good news.

well, crypto has been so volatile especially this year and many with fiat are making huge profits from this volatility. now best time to buy steem and power up. thanks for sharing

of course that is wise decision for them but as i know they will open every possible crypto when they will see something promising.