Hacked cryptocurrency exchange Coincheck to resume yen withdrawals from Tuesday

Cryptocurrency exchange Coincheck's signboard is pictured in front of a building where their office is located in Tokyo
Cryptocurrency exchange Coincheck's signboard is pictured in front of a building where their office is located in Tokyo, Japan February 2, 2018. REUTERS/Kim Kyung-Hoon

February 9, 2018

By Takahiko Wada and Thomas Wilson

TOKYO (Reuters) – Japanese cryptocurrency exchange Coincheck Inc, reeling from a daring theft of $530 million of digital money by hackers, said it would lift curbs on yen withdrawals from Tuesday.

The exchange, which froze withdrawals of yen and digital currencies following the theft, said in a statement on Friday it had confirmed the security of its systems and would process requests for yen withdrawals as it received them.

Coincheck added that it planned to lift restrictions on cryptocurrency withdrawls “as soon as we are able to guarantee the secure resumptions of its operations for each feature”. It did not give further details.

The exchange has received withdrawal requests from customers totaling about 30 billion yen ($280 million), a person with direct knowledge of the matter said.

The Coincheck statement was posted after Friday business hours. It could not be reached for comment on size of withdrawal requests.

After the late January heist, Japan’s Financial Services Agency ordered Coincheck to raise its standards, and gave the exchange until Tuesday to submit a report on the hack and measures for preventing a recurrence.

The Coincheck hack highlighted the risks in trading an asset that policymakers are struggling to regulate and put the focus on Japan’s framework for overseeing these exchanges.

Japan’s financial regulator has also launched on-site checks of two other cryptocurrency exchange operators it sees as potentially vulnerable to cyber-attacks, a person with direct knowledge of the matter said on Friday.

Representatives of the exchanges, Tokyo-based GMO Coin and Osaka-based Tech Bureau Corp, were not immediately available for comment. The FSA could not be reached for comment outside business hours.

Early next week, the FSA may widen its inspections to other exchanges it sees as lacking in security, the person said.

After the Coincheck heist, the FSA said it would investigate Japan’s other 31 cryptocurrency exchanges for security flaws. It ordered them to submit a report on their system risk management and storage of cryptocurrencies, and said it would follow up with on-site checks if it found vulnerabilities.

(Reporting by Takahiko Wada and Thomas Wilson; Editing by Shri Navaratnam and Clarence Fernandez)