Japan raps Coincheck, orders broader checks after $530 million cryptocoins got hacked

Japanese authorities said on Monday they would investigate all cryptocurrency exchanges in the country for security gaps and ordered Coincheck to raise its standards after hackers stole $530 million of digital money from the Tokyo-based exchange.

The theft - one of the world’s biggest cyberheists - highlights the vulnerabilities in trading an asset that policymakers are struggling to regulate, as well as the broader risks for Japan as it aims to leverage the fintech industry to stimulate economic growth.

The Financial Services Agency (FSA) on Monday ordered improvements to operations at Coincheck, which on Friday suspended trading in all cryptocurrencies except bitcoin after hackers stole 58 billion yen ($534 million) of NEM coins, among the most popular digital currencies in the world.

Coincheck said on Sunday it would repay about 90 percent, though it has yet to figure out how or when.

The NEM coins were stored in a “hot wallet” instead of the more secure “cold wallet”, which operates on platforms not directly connected to the internet, Coincheck said. It also does not use an extra layer of security known as a multi-signature system.

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