NEMs of 523 million XEM ($ 533 million) were leaked from Japanese crypto-exchange Coincheck. The specifics of the situation and the crime has not been disclosed, but this multiple crypto currency-exchange is being investigated by the Japanese FSA. In Japan, Bitcoin leaked $ 1.6 billion in 2014 and was a major incident as it caused the Mt. Gox company to go bankrupt. There are many outflows of cryptocurrencies, such as the Dao incident where Etherium was hacked on a global scale for over $60 million, which highlighted the issues relating to the cryptocurrency.
XEM: A kind of crypto-currency
NEM: A unit of XEM
There have been a series of spill cases of cryptocurrencies. According to the report, there were only six observers monitoring Coincheck. The robust security of Blockchain technology and the merit of cryptocurrency operating 24 hours a day, 365 days are good measures to prevent cyber attacks if there is a problem with the management system.
Unlike banks, cryptocurrency exchangers do not disclose deposit balances or account numbers. While the information disclosure to users has not yet been developed, the world’s cryptocurrency market size has surpassed 91 trillion yen (as of January 8, 2018), the rapid increase in users and the size of transactions are rapidly expanding.
Every time a cryptocurrency leakage incident has occurred, the price of the cryptocurrency fell, then it bounced back, so no one knows whether the cryptocurrency will collapse in 2018. In a panel discussion opened by the Japan CryptoCurrency Business Operator Association, Coincheck said it had managed the cryptocurrency offline and stated that it explained the adoption of multi-sing which requires multiple electronic signatures in the transaction. While NEM is controlled by neither, the problems of internal control and the execution system of cryptocurrency exchange companies are clearer than the cryptocurrency itself.
Businesses that develop exchanges before the introduction of the registration system of the cryptocurrency exchange in April 2017 are allowed to operate as “deemed traders” by the Financial Services Agency. Despite the regulation of the fund settlement law and supervision similar to registrants, the Financial Services Agency announced that Coincheck had vulnerability on the system and prompted early rectification.
In New York State, France, Germany, Switzerland, cryptocurrency exchangers are licensed. As in the case of Coincheck, 15 companies still continue to operate as deemed dealers in Japan. Is internal control of these suppliers sufficient? The financial situation also remains uncertain to users. Should the exchange also have a deposit insurance system like banks? Let’s be prudent and pay more attention to the challenges Japan faces in driving the cryptocurrency market.