Russian hackers, not North Korean, may be the bad actors behind probably the biggest ever theft from a cryptocurrency exchange.
The personal computers of Coincheck employees have allegedly been found to have been infected by a virus associated with Russian hackers.
The personal computers of employees at hacked Japanese crypto exchange Coincheck have allegedly been found to have been infected by a virus associated with a hacker group of Russian origin. The allegation was reported by Cointelegraph Japan on June 16.
Cointelegraph Japan cites a report from Japanese media agency Asahi Shimbun, which claims that fresh research has cast doubt on prior assumptions that the high-profile hack had been perpetrated by attackers with a North Korean connection.
Experts are now considering the possibility that the crime was committed by “an unknown group of hackers,” Cointelegraph Japan notes.
According to Asahi Shimbun, “Mokes” and “Netwire” viruses have been identified in recent investigations into employees’ personal computers, which may have been disseminated via an email that installed the viruses to gain unauthorized access to the exchange’s private keys.
Given that both viruses are known to have been previously deployed by Russian hackers, a United States expert told the media agency:
“From the analysis of the virus, Eastern Europe and Russia may be related to the server criminal group of the base.”
As Asahi Shimbun reports, both viruses enable hackers to take over the infected PC and operate it remotely. While Morks was first promoted on a Russian forum in June 2011, Netwire is reported to have been known to cybersecurity investigators for 12 years.
As reported this May, as yet unidentified hackers used phishing and viruses to withdraw 7,000 bitcoin (BTC) from compromised Binance hot wallets in a premeditated attack that went undetected by the exchange’s security systems.
While Japan’s new laws are welcoming for most crypto exchanges, as they expect more institutional investors, custodians and wallet makers are getting worried.
On May 31, the Japanese House of Representatives amended two cryptocurrency-related laws, the Payment Services Act and the Financial Instruments and Exchange Act, which will come into effect in April 2020.
Most Japanese crypto exchanges have welcomed the changes, since they expect more institutional investors to join the crypto industry. However, others voiced their concerns that the changes may bring some uncertainty to custodians and wallet service providers.
The two documents outline several specific changes, which can be discussed separately.
The Payment Services Act (PSA)
Virtual currency to crypto assets
The new law revises the term “Virtual Currency” and says that “Crypto Asset” would be a better term to use to describe cryptocurrencies. The change was made since “crypto assets” is used more frequently at international meetings, such as the G-20. Meanwhile, the use of “virtual currency” may mislead the public into thinking that cryptocurrencies function or hold the same status that is associated with fiat currencies. This change, however, is not compulsory for implementation by exchanges and the media.
Tighter restrictions on custodian services
According to the documents, custodian service providers will now have to share the same level of accountablility for the risks as exchanges, such as the leakage of users’ crypto assets and money laundering/terrorism financing. So, custodians will need to be registered with the Financial Services Agency (FSA) even if they don’t provide crypto exchange or trading services.
As of now, there are no specific guidelines for cases that are not clear cut. However, the governing bodies are likely to release further information to clarify the situation.
Exchanges must change how they store crypto
From April 2020 onward, crypto exchanges operating in Japan will have to manage users’ money separately from their own cash flows. This means finding a third-party operator to keep hold of the users’ money (this can be a trust company or any other similar entity).
When managing users’ money, “reliable methods” will have to be used, such as a cold wallet. If the exchanges manage users’ stored cryptocurrencies in other ways, such as a hot wallet system, they have to hold “the same kind and the same quantities of crypto assets” as the users’ crypto assets. This would enable the exchange to reimburse users if the funds get stolen from the platform.
The revised laws still do not directly regulate anonymous cryptocurrencies or privacy coins such as monero and zcash. On March 15, the FSA said it would deal with problematic crypto assets that are easily used for money laundering because their transaction records are not traceable. Back then, the agency dubbed the anonymous coins as “problematic crypto assets.” However inclusion of anonymous coins in the bill eased the speculations regarding whether the FSA is indeed planning to regulate this area of the crypto sphere. Also, a recent report highlighted that money laundering in Japan is on the rise.
As Cointelegraph reported earlier, in May 2019, Japan has been working on some time to combat money laundering through anonymous coins and imposed inspections upon exchanges that offered these coins for trade to their user base.
The Financial Instruments and Exchange Act (FIEA)
Revised FIEA documentation introduced the concept of electronically recorded transferable rights (ERTRs) to define that initial coin offerings (ICOs) and security token offerings (STOs) are regulated under the FIEA. ERTRs refer to tokens issued in the expectations of profits (i.e., security tokens).
More specifically, tokens issued under STOs can constitute ERTRs if the three requirements below are met, according to Japanese law firm Anderson Mori & Tomotsune:
“(i) Investors (i.e., right holders) invest or contribute cash or other assets to a business,
(ii) the cash or other assets contributed by investors are invested in the business, and
(iii) investors have the right to receive dividends of profits or assets generated from investments in the business.“
Notably, while ERTRs will be regulated under the FIEA, they are excluded from using the official term “crypto assets,” as per PSA guidelines.
From April 2020 onward, crypto asset derivatives transactions will be regulated under the FIEA. The law doesn’t specify margin rates, although the Japan Virtual Currency Exchange Association (JVCEA), a major self-regulatory organization in Japan, has a guideline that proposes to restrict margin rates by four times or even lower.
The Anderson Mori & Tomotsune report says that the JVCEA’s guidance “may be taken into account when specific provisions are promulgated by the relevant Cabinet Office Order.” It then goes on to suggest that the exact level may be decided upon in the future:
“Cabinet office orders determine how laws will be enforced in reality and something the Japanese crypto industry pays careful attention to after the amendment of the two laws on May 31st.”
Introducing a clear regulation on derivatives transactions may be urgent, since 80% of crypto trades comes from derivatives, and yet it is largely unregulated. Data from the Japan Virtual Currency Exchange Association (JVCEA) shows that the volume of leveraged, margin and futures trading for crypto was far higher than that of spot trading in Japan from April 2017 to March 2018.
The FIEA prohibits anyone from engaging in activities such as dissemination of rumors, usage of fraudulent means for purposes of selling or purchasing or engagement in any transaction in respect to crypto assets or for purposes of engagement in any crypto asset derivative transactions and the likes.
Anderson Mori & Tomotsune has set out the possible areas that may constitute a breach of law by the governing body:
“(i) engage in fake sales and purchases;
(ii) engage in collusive sales and purchases;
(iii) entrust or accept any entrustment of fake sales and purchases or collusive sales and purchases;
(iv) engage in market manipulation through actual sales and purchases;
(v) engage in market manipulation through representations and certain similar acts”
Market reaction is mixed
“Japan is leading the crypto regulation”
Most Japanese crypto exchanges that Cointelegraph Japan contacted have spoken positively about the new laws.
Katsuya Konno, head of the CEO office of fintech company Quoine, welcomes the changes and thinks that the revised laws will enhance customer protections and encourage more institutional investors to enter the crypto industry. According to a translation of his comments, he told Cointelegraph:
“I think it’s great, frankly. With the revised content, customer protection is further pursued, so I think that Japan will be able to become a world leader in virtual currency-related regulations, and the entry of institutional investors will also increase. As new initiatives such as STO are becoming possible, the boundaries between virtual currency and existing finance may be overlapping more and more.”
As reported, Quoine’s trading platform, Liquid, hit unicorn status with over a $1 billion valuation in April 2019.
BitPoint, another crypto exchange in Japan, has also praised the new laws. The exchange’s spokesperson told Cointelegraph, in translation:
“We are very positive. Clear rules are expected to help institutional investors enter, leading to market expansion.”
BitPoint also expects more institutional investors to join the crypto movement and the market to expand further as crypto rules become clearer. However, the exchange has admitted that a review of the wallet management system will need to be undertaken in order to strike the right balance between security that entails the use of cold wallets and more user friendly, but less secure, hot wallets. BitPoint will therefore look to entrust fiat currencies to a trust company and receive a financial instruments business operator’s license.
Meanwhile, Coincheck, which just obtained an exchange license from the FSA in January, wrote in a translated email that the new laws are something it expected, also adding:
“By clarifying the target and standards of regulation through the current legal reform, we believe that it will lead to the healthy development of the cryptocurrency industry. On the other hand, there is also concern that the term change to crypto assets may be a setback for cryptocurrency as a means of payment. I would like to make an effort as an industry to make that not happen.”
The exchange has also said it would be closely monitoring the cabinet office orders that determine how the laws will be enforced in reality.
Ambiguity for wallet makers
AndGo, a Japanese-made hardware and mobile wallet development company, outlined some “ambiguity” in the new laws when speaking to Cointelegraph Japan.
AndGo points out that there are two kinds of wallet makers. One is able to move clients’ assets. It will be viewed as a custodian wallet and required to be registered with the FSA, as in the case of exchanges. The other type doesn’t possess clients’ private keys, hence can’t move clients’ assets. The new law doesn’t apply for the latter type.
As AndGo explained the issue, its wallet is of the second type, so it should not be subject to the new laws. However, the laws are unclear about the cases in which it holds one of the private keys (as with multi-sig) and a private key that clients encrypts by setting up their own passwords. In those cases, wallet makers cannot move clients’ assets solely by their own volition. According to a translation of a correspondence with AndGo:
“The details and interpretation of this regulation are often vague, and I think that wallet operators will have to ask the FSA individually about gray areas in the future.”
However, AndGo understands that regulators don’t often catch up with the rapid pace of technological innovation, writing:
“While entrepreneurs develop their service products by looking years ahead, regulators focus on technologies and services that were released years ago.”
After attempting to get ahead with crypto regulation, Japan witnessed two major hacks in 2018. Protecting crypto customers and investors has become a priority, and those who have enough funds to comply with the regulation may be at an advantage. In contrast, it may become harder for crypto entrepreneurs to enter the industry. The FSA, in the comment to Cointelegraph Japan (translated into English), addressed some of the concerns, however:
“We think the balance between customer protection and innovation is important. We continue to prioritize customer protection and other regulations where appropriate, while making sure that they will not be too much for the industry to grow further.“
Ahead of the enforcement day, the FSA is going to release government orders including a Cabinet Office Ordinance, which determines how the law will be enforced. At the same time, it will seek public comments on its website regarding the orders, one month before the implementation. It is not yet clear what the FSA will include in the government orders, but one of them is expected to be about the rate of margin trading.
Moreover, according to the FSA, many elements of Japan’s new laws are included in the recently published IOSCO’s document, which will be used in the upcoming G-20 meeting in a discussion surrounding crypto regulation. The FSA hopes to “share Japanese experiences with G20 members and deepen the mutual understanding.”
The sudden onset of a new cryptocurrency bull market saw an immediate change in consumer interests, say three platforms.
Data obtained from three major trading platforms — Bitpoint, DMM Bitcoin and Coincheck — pointed to a significant increase in interest from entry-level investors since the end of March.
The change in habits among those who assumedly did not use cryptocurrency before highlights the impact of rising prices on consumer interest, which rose in step with the return of a bull market across the industry.
Daily account openings for Bitpoint were three times as high in May as for March, and twice more than in April.
DMM saw May openings double those in March and 1.5 times more than in April, while Coincheck likewise saw openings treble in May compared to March.
Coincheck’s PR department told Cointelegraph Japan that the local peak occurred on May 14, which saw seven times more accounts coming online than on the average day in March.
The data corresponds to Bitcoin prices between $3,750 and $4,150 in March, while May 14 saw BTC/USD trade around $8,250.
As Cointelegraph reported, it was not just Japan’s exchange sector that capitalized on the resurgence. This week, Kraken unleashed an equity sale which has gained over €8 million ($9.3 million) in two days.
A major crypto exchange in South Korea has shut down, showing the intensity of the brutal 16-month bear market that caused a wide range of issues for crypto businesses.
The shutdown of Coinnest on April 18, one of the major crypto exchanges in South Korea, showcased the intense brutality of the 16-month bear market, which came crashing down as soon as bitcoin achieved an all-time high at a price of $20,000.
While not many major crypto exchanges have closed their operations in the past year, most exchanges — with the exception of some platforms considered to have real daily volumes by Bitwise Asset Management — have struggled to maintain a stable inflow of revenue.
The bear market was particularly difficult for small exchanges that are known to strategically inflate their volumes to appeal to users on leading market data platforms like CoinMarketCap.
Profit margins sharply dropped due to an overall drop in daily volumes for smaller exchanges such as Korbit in South Korea, creating a difficult environment to survive in.
Cryptocurrency exchanges generate the overwhelming majority of their revenues through fees that occur when trades are executed. When daily volumes of crypto assets drop, exchanges suffer a dip in revenue.
Why crypto exchanges suffered during the bear market, especially in South Korea
According to a report from The Block, Binance generated a quarterly profit of around $71 million from January to March 2019, nearing the annual operating profit of Upbit, South Korea’s largest crypto exchange.
Upbit is the only exchange among the top five cryptocurrency exchanges in South Korea’s local crypto exchange market to record a profit in 2018.
Bithumb recorded a net loss of $175 million, and other leading platforms like Coinone and Korbit also recorded relatively large losses in 2018 to the tune of tens of millions of dollars.
Although a Bithumb representative told MK, a mainstream media outlet in South Korea, that the business of the exchange remains solid, a $175 million loss could have been critical for the exchange if it had not reportedly secured around $190 million in new funding:
“Even during a phase in which the cryptocurrency market is struggling, Bithumb is sustaining a solid business with unique services and global market dominance. Bithumb will put in all efforts in protecting user funds.”
Other challenges: no new registrations
2018 was particularly hard for exchanges in South Korea because exchanges were prohibited from accepting new registrations for awhile. As such, exchanges experienced a substantial decline in revenues.
Last year was challenging even for Upbit, the country’s dominant leader in the cryptocurrency exchange market.
A representative of Dunamu, the parent company of Upbit, said that the exchange was able to operate healthily throughout 2018 due to the company’s strategy of reducing marketing efforts and resources by employing a cautious approach in management.
“In comparison to other exchanges, Upbit operated with caution by reducing marketing efforts and overall manpower because new registrations were blocked. Most of the revenues recorded by Upbit in 2018 were generated in the first quarter of 2018 when the cryptocurrency market was hot. Upbit actually recorded an increase in revenues and operating profit since 2017.”
For smaller platforms like Coinnest, it was virtually impossible to expect any substantial operating income because of the sentiment around the market and the state of the cryptocurrency exchange market in South Korea.
Coinnest specifically suffered more than others due to the exchange’s reported $5 million mishap in January, during which the exchange mistakenly sent more than $5 million to clients.
Moreover, on Oct. 18, the former CEO of Coinnest was sentenced to three years in prison and a $2.6 million fine for fraud and for extracting user funds for personal financial gain. According to court documents, the former CEO and two other executives stole more than $30 million from users and reportedly faked around $400 million in volume.
Ultimately, citing regulatory uncertainty and a drop in crypto trading volume, a Coinnest representative said that the exchange was forced to close, a fall from grace for an exchange that was once the third biggest in the local market. The exchange’s representative said:
“It is a natural result of a decrease in trading volume. Both regulatory issues and business decisions have served as a background for this decision.”
Even big firms like Coinbase struggled
For exchanges, a strong network effect is crucial for sustainability. Hence, apart from the top five exchanges in every major region, most exchanges consistently struggle to generate profits.
In a bear market, the situation gets worse for both small and large exchanges, as seen in the performance of Coinbase in 2018.
On April 18, Reuters reported that Coinbase recorded an annual revenue of $520 million in 2018, which would normally be considered a healthy figure coming off of a brutal 85% correction of crypto assets.
But, Coinbase is one of the biggest exchanges in the global market, and it failed to reach its projection by 60%:
Net revenues of 520 million dollars with a ~40%+ profit margin for the year of 2018 is beyond excellent! Congratulations @coinbase team.
— Gabor Gurbacs (@gaborgurbacs) April 18, 2019
Bloomberg said in October 2018 that Coinbase expected an annual revenue of $1.3 billion in 2018 despite the correction of the market. Given that the document was obtained by Bloomberg late last year, it is likely that the last quarter was distinctly agonizing for exchanges.
Coinbase missed its annual revenue projection by a staggering 60% even with the continuous efforts of the exchange to increase the volume of the platform through the addition of new tokens and crypto assets.
Throughout the past two years, major exchanges in strictly regulated markets, such as the United States, refrained from prematurely listing tokens due to regulatory uncertainty around the nature of tokens.
In April alone, Coinbase listed tokens from Maker (DAI), Augur (REP) and EOSIO (EOS) on Coinbase Pro, following the listing of Stellar’s lumens (XLM) and the highly anticipated support for XRP, the cryptocurrency developed by Ripple.
The Coinbase team said after listing lumens in March:
“One of the most common requests we receive from customers is to be able to trade more assets on our platform. With the recent announcement of our new listing process, we anticipate listing more assets over time that meet our standards.”
Which other exchanges have shut down?
In South Korea alone, there are hundreds of cryptocurrency exchanges, with some reports estimating the number of exchanges in the country surpasses 100. Most of these exchanges are small companies that aim to drive short-term profits with aggressive token listings.
Due to a lack of resources, when minor exchanges are hit with security breaches, hacking attempts or a drastic drop in trading volume in the cryptocurrency exchange market, they are unable to cope with changes in market conditions.
Throughout the past 16 months, exchanges like Coinnest, Coinpulse and Liqui have shut down as a result of liquidity issues, and bigger platforms including QuadrigaCX, Coincheck and Zaif have closed following high-profile security breaches.
While Coincheck and Zaif have reopened in Japan with the approval of the Financial Services Agency (FSA), the two firms needed a lifeline from bigger conglomerates to fully compensate all user funds.
Zaif reopened on April 19 after securing a deal with Fisco worth around $44.5 million to compensate users affected by the hack.
“After that, on condition of financial support of approximately 5 billion yen, transfer of Zaif business from Tech Bureau Co., Ltd. to us was decided. In addition, we have asked customers via the Internet and by telephone etc. for the procedures for consenting to business succession,” Fisco team said.
Why small exchanges are always vulnerable
Small exchanges often fall victim to hacking attacks because compliance and security cost a significant sum of money. Well-regulated platforms like Gemini have insurance, in-house security experts and regular audits in place to secure user funds. But small exchanges cannot afford similar resources as major companies.
Even Coincheck, which was once the largest cryptocurrency exchange in Japan, did not have proper in-house security experts to oversee the platform:
Main takeaways from Coincheck press conf:
– only NEM impacted
– plans to continue operating, restart trading
– not clear on plan to repay customers
– no multisig💀
– wouldn’t admit security was weak
– not sure how hacked, if domestic or foreign hackers
– CEO barely spoke
— Yuji Nakamura (@ynakamura56) January 26, 2018
Former Coincheck CEO Koichiro Wada said in April 2018:
“We were aware we didn’t have enough people working on internal checks, management and system risk. We strived to expand using headhunters and agencies, but ended up in this situation.”
Although an investigation is said to be ongoing in the QuadrigaCX scandal — during which Gerald Cotten, the CEO of the exchange, lost $190 million in crypto and other funds after he reportedly passed away with private keys — the Coinbase team speculated that QuadrigaCX may have also been affected by the bear market and faced liquidity issues. Brian Armstrong, the CEO of Coinbase, said:
“QCX was one of the oldest exchanges in existence (founded in 2013). If they planned an exit scam, it likely would have been timed better. They suffered a multimillion dollar bug in June 2017. This is when we start to see movement of funds to ‘cold storages.’”
Patterns of sends from cold storage suggest they tried keeping the exchange afloat, and maybe attempted to trade their way out of the hole. Liquidity dried out and the bear market of 2018 may have caught up with them. The sequence of events suggests this was a mismanagement with a later attempt to cover it up.
Exchange closures will decline as the industry matures
The crypto bear market is crucial because it allows the industry to settle down, reflect, escape the speculative mania phase and rebuild the infrastructure around the market.
During an extended correction, the prices of crypto assets plummet and the volume of the market drops, leaving many low-quality projects and exchanges with a few options.
The cycle of the crypto market of speculation-correction-build-rally improves the quality of the industry and focuses the resources, capital and labor within the sector to quality companies.
The broker’s acquisition of Coincheck and the crypto bear market appeared to weigh on overall performance.
The spin-off, currently dubbed TradeStation Crypto, would serve semi-professional traders and seeks to shore up profitability for Monex’s cryptocurrency offerings.
Reuters also noted today that Monex had a loss of over $15 million on its crypto operations in 2018. The figure, part of financial performance data released this week, stems from the loss-making Coincheck exchange thatMonex acquired last April.
Despite restructuring the platform and returning it to full regulated service, the operator saw total losses of 1.7 billion yen ($15.2 million) for the 12 months to March 2019.
Overall, Monex’s annual revenues dipped slightly compared to 2017, from $440 million to $420 million.
In November, BTC/USD almost halved to hit recent lows of $3,100, a move which accompanied a drop in mining activity and cost-cutting exercises by exposed companies such as mining giant Bitmain and exchange Huobi.
Monex also signalled changes could be afoot this month, with a plan to integrate crypto into its retail client offerings.
Monex Group Inc is considering adding crypto to its retail client offerings in a bid to become more competitive.
Online brokerage Monex Group Inc., owner of the hacked Japanese crypto exchange Coincheck, is considering adding crypto to its retail client offerings in a bid to become more competitive in the local brokerage market. The news was reported by Bloomberg on April 15.
According to Bloomberg, Monex now sees its Coincheck involvement as potentially instrumental in restoring its erstwhile market dominance.
Founded in 1999, Monex was reportedly once the country’s most popular online brokerage, but has since reportedly been eclipsed by rivals such as Rakuten, SBI Holdings and Mastui.
Monex’s brokerage unit is thus mulling the addition of digital currencies to its offerings for retail clients in collaboration with Coincheck. Monex Securities Inc.’s new president, Yuko Seimei, conceded that a new strategy is critical to reviving the firm:
“We’ve fallen a little behind — we can’t deny that. If we keep doing things the way we have, we may not be able to close the gap.”
Amid increasing competition in the brokerage market, Japanese investors’ enthusiasm for cryptocurrencies could help the organization reclaim clients, Bloomberg notes. The Japanese yen currently accounts for ~46.5% of national fiat currencies traded for bitcoin (BTC), according to crypto statistics site Coinhills.
As reported, under the stewardship of Monex, Coincheck took a series of measures to improve its protection and trading systems, as well as reimbursing those customers affected by the hack.
Monex Group’s financial report on Q3 for the 2019 fiscal year revealed that Coincheck had halved its losses in Q3, as compared with the preceding quarter.
This March, Monex announced major changes to its management composition, appointing three Coincheck executive directors to Monex roles to enhance cooperation between the two firms.
This week, Money Forward Inc., the operator of one of Japan’s most popular personal budgeting apps, announced a decision to halt its plans to launch a crypto asset exchange, citing profitability concerns amid the bear market.
The desk’s first two altcoins could be a taste of more to come, the company suggests.
Coincheck, which began operating its OTC service with Bitcoin (BTC) at the start of the month, now also offers Ethereum (ETH) and Ripple (XRP), the second and third largest cryptocurrencies by market cap respectively.
OTC desks offer specialized services for large-volume traders, allowing them to save on fees and skirt what would otherwise be considerable hurdles purchasing or selling major crypto investments via standard methods.
The feature has become popular among major exchanges worldwide, Cointelegraph previously reporting on their continued emergence despite the ongoing crypto bear market.
According to a blog post from Coincheck today, the company will also consider adding further altcoins to its OTC desk in due course, but did not hint as to which it would prioritize.
Coincheck has gone from strength to strength following its takeover by online broker Monex Group last April.
After redressing issues resulting from its giant half-billion-dollar hack in January 2018, Monex succeeded in gaining a Japanese regulatory license for Coincheck to continue serving customers in December 2018.
In Q3, according to a financial report released at the end of January, Coincheck had already halved its losses compared to the previous quarter.
Japan continues to become a hotbed of crypto trading business activity, with investment outfit ST Blockchain Fund today announcing that it had pumped $200 million into the parent company of Bithumb, one of South Korea’s largest exchange platforms.
Japanese cryptocurrency exchange Coincheck has launched an over-the-counter bitcoin trading service aimed at clients with deep pockets.
Japanese cryptocurrency exchange Coincheck has launched a Bitcoin over-the-counter trading desk for large-scale institutional investors.
The Coincheck OTC trading desk will enable clients to directly trade large volumes of Bitcoin — starting from 50 BTC ($207,000 to press time) — between each other using a web interface hosted by Coincheck.
Opening hours will be limited to weekdays 10:00-15:00 (JST) and overtime trading and use of the Coincheck app or API trading are not eligible, the exchange clarified in a blog post accompanying the launch of the new OTC desk.
Coincheck has written that the new service will allow large-scale institutional players to buy and sell large amounts of crypto swiftly, and it has also indicated that it will consider adding OTC support for cryptocurrencies other than Bitcoin in future.
As previously reported, major United States crypto exchange and wallet provider Coinbase launched its own OTC services for institutional clients in November 2018, having gone through a process to become a fully regulated broker dealer by the U.S. Securities and Exchange Commission (SEC) last year.
Coincheck — which notoriously suffered an industry-record-breaking $532 million hack in January 2018 — was acquired by Japanese broker Monex Group in mid-April of that year in a move to rehaul its shareholder composition and management.
Under the new stewardship of Monex, Coincheck took a series of measures to improve its protection and trading systems, as well as reimbursing those customers affected by the hack. In mid-November 2018, Coincheck resumed crypto trading, as well as joined the Japan Network Security Association in a stated bid to restore its image. The exchange was granted an operating license from Japan’s Financial Services Agency in December 2018.