Recent issues with cryptocurrencies have been a problem for quite some time in Japan, and as of yet – there seems to be no definitive solution to these problems. Because of unsafe business practices, Japan’s Financial Services Authority (FSA) has decided to sanction three crypto platforms. This includes FSHO, Lastroots, and Eternal Link.
Crypto Platforms need to improve
All three of these platforms have received orders to improve their methods of conducting business. These orders came as a part of regular inspections that Japan is known for conducting when it comes to crypto exchanges. According to FSA, the unsatisfactory procedures of these companies are not enough to prevent problems like money laundering, and due to high risks, the penalties have been imposed.
Two of these platforms were ordered to suspend their operations, and have given individual deadlines to do so. FSHO was told to halt any activity for two months, starting on April 8, while Eternal Link needs to do the same from April 6.
As for Lastroots, the situation is a bit different, since they only received instructions to improve their practices. The results of the investigations will be presented by Japan’s Minister of Finance.
Another two exchanges were suspended earlier this year, in March. One of them was the Bit Station, which is Nagoya-based, while the other one was FSHO. FSHO was ordered to terminate all services until April 7.
The problems mostly revolved about the fact that operators were not performing proper checks when it comes to large transactions, and that proper measures were not implemented.
As for Bit Station, they received a penalty because of their senior officials, who were supposedly implicated in their client’s crypto deposit embezzlement. Some similar actions in South Korea even led to arrests of high-ranking representatives of crypto exchanges.
FSA started their inspections back in February of this year, and they even included 16 trading platforms that weren’t even registered at the time. In the end, a list containing 32 exchanges was published, and around half of them have already obtained the necessary licenses that allow them to provide their services.
Consequences of a hacking attack
The revisions that Japan’s government is taking now actually came as a consequence of a huge hacking attack that happened in January. The target of this hack was Coincheck, and the attackers managed to steal around ¥58 billion in NEM, which is approximately around $550 million.
The attack is still under investigation, but it is already considered to be one of the biggest one in the history of cryptocurrency. According to cybersecurity experts, it is more than possible that half of the stolen coins have already been laundered on the darknet.
This is not the first time that Japan had a problem with cryptocurrency theft, and this has become quite a problem in the last few years. It is estimated that $6.3 million was stolen during last year, which is a significantly smaller amount than what was stolen during the Coincheck heist.
Because of this, Japan has decided to open a center that will dedicate its efforts to combatting cybercrime. This, of course, includes all forms of hacking attack, especially crypto theft. Over 500 investigators, analysts, and cybersecurity researchers have already joined this unit. Forming it was deemed necessary since last year alone noted over 149 crypto attacks.