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  HOME | Business & Economy (Click here for more)

Bitcoin Plunges 20% in Japan Following News of Coincheck Inspection

TOKYO – The price of bitcoin dropped 20 percent in the Japanese markets after authorities inspected on Friday the headquarters of the cryptocurrency exchange operator Coincheck to investigate its financial situation in the wake of a recent cyberattack.

The bitcoin traded on Friday below 877,000 yen ($8,011) after 10:30 am local time (0130 GMT) at Coincheck and BitFlyer, two of Japan’s main markets, its lowest price since mid-November.

This represents a drop of more than 10 percent during the hour after Japanese media published the information on the authorities’ inspection of Coincheck, and an accumulated intraday drop of 20 percent.

Officials from the Japanese Financial Services Agency (FSA) entered the headquarters of Coincheck in the district of Shibuya, Tokyo, in order to verify whether the company holds sufficient funds to compensate its clients for the losses following the cyber attack, according to the public broadcaster NHK.

The authorities want to clarify whether Coincheck had separated its and its clients’ assets, and whether it has the necessary liquidity to reimburse its users after more than 58 billion yen disappeared after the hack a week ago.

The FSA officials will also inspect whether the company is plugging the security holes that allowed for the cyberattack, and whether it has provided enough information to the 260,000 customers affected by what is considered the largest digital currency hack to date.

In a press conference after a cabinet meeting, Finance Minister Taro Aso said the government wanted to make sure the matter was being managed properly.

The Japanese operator has promised that it will reimburse the losses to those affected, but has not specified when it will do so or whether it has sufficient own assets to undertake such a volume of payments, while maintaining restricted services such as the withdrawal of yen and virtual currencies.

Those customers affected have begun to put joint pressure on the company and are preparing legal actions, they announced on Twitter.

The Japanese regulator has warned that another inspection would be carried out if Coincheck failed to adopt satisfactory security measures and urged the other 31 cryptocurrency exchanges in Japan to strengthen security measures.

The Jan. 26 cyberattack on Coincheck is reminiscent of the Mt. Gox scandal in 2014. It was once the largest bitcoin exchange globally but went bankrupt following the disappearance of 850,000 bitcoin units, whose estimated value at that time was about 48 billion yen.

 

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