TOKYO -- Japan's Financial Services Agency (FSA) on Friday morning carried out a raid on Coincheck, the beleaguered Tokyo cryptocurrency exchange from which hackers stole about 58 billion yen ($530 million) worth of the virtual currency NEM last week.
"The investigation is being conducted to protect the current users," Finance Minister Taro Aso said Friday following a Cabinet meeting. The swoop was the first of its kind in Japan and follows a business improvement order the FSA issued to Coincheck on Jan. 29. The firm was ordered to set up a risk-management system and report to the regulator by Feb. 13.
Some 260,000 Coincheck customers were victimized in the theft. The company has said it will reimburse them with yen, but questions have emerged about its ability to pay, as well as why it had currencies stored in a hot wallet connected to the internet and thus potentially vulnerable to thieves.
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The FSA is now probing Coincheck's finances and trying to determine how the hack took place, as well as whether proper security measures have been set up, the Nikkei newspaper reported. Officials at the watchdog and the company were not immediately available for comment.
The NEM Foundation, the organization behind NEM, said Wednesday it is closely monitoring the stolen funds, adding, "None of the stolen funds have been sent to any exchanges. As long as those funds are off public exchanges they will be very difficult to liquidate, especially in large amounts." The foundation has called on the cryptocurrency community to take proper security measures such as hardware wallets and multifactor authentication.