Crypto Exchanges Suspended By Japan’s Financial Services Agency

News | March 8, 2018 By:

Japan’s Financial Services Agency (FSA) has issued punishment notices to several crypto exchanges and forced others to halt business.

The FSA said it issued business improvement orders to five crypto exchanges, including Coincheck, GMO Internet’s GMO Coin, Tech Bureau Corp.’s Zaif, Bicrements, and Mr. Exchange. The regulator said the exchanges lacked the proper and required internal control systems for risks, such as money laundering and terrorism financing. The exchanges were ordered to revise their management structure, improve anti-money laundering procedures, and submit a report by March 22.

A senior official at the FSA said the agency confirmed that Coincheck had funding to reimburse its customers for XEM coins stolen from its exchange in January. It said the company would announce details of its reimbursement plan later in the day.

The regulator also suspended the operations of the Bit Station and FSHO exchanges based in Yokohama and Nagoya for one month.

The regulator alleged that FSHO “does not have a proper system to monitor trading and has not given training to its employees,” while a senior employee at Bit Station was found to have used customers’ bitcoin for the person’s own purposes. The FSA said that Bit Station, which has been allowed to operate on a provisional basis, dropped its application to become an authorized exchange.

The FSA has come under fire for allowing 16 crypto exchanges, including Coincheck, to operate while they await a decision on their applications under a revised licensing system introduced last year. The regulator has approved applications for another 16 operators, some of which like Zaif and BitFlyer are among the world’s largest crypto exchanges.

The regulator said it will established a cryptocurrency exchange industry study group to examine institutional issues regarding cryptocurrency. Members of the study group will come from academic institutions, cryptocurrency exchanges as well as government agencies as observers.