Monex Group buys hacked crypto exchange Coincheck

TOKYO - AFP

Japanese online broker Monex Group said on April 6 that it would buy virtual currency exchange Coincheck, which was hit by a massive hack that saw thieves steal hundreds of millions of dollars in virtual currency.

The decision came after Coincheck refunded more than $440 million to its 260,000 customers who lost their holdings of NEM, a leading cryptocurrency, following the hack.

Thieves siphoned away 523 million units of the virtual currency from Coincheck -- then valued at $547 million -- during the January hack, thought to be one of the biggest ever.

Monex said in a statement it would acquire all of the 1.78 million shares of Coincheck for 3.6 billion yen ($34 million).

“I think we’ll be able to create a new, powerful group company” with Monex’s experience and Coincheck’s new technology, Monex Group CEO Oki Matsumoto told a news conference.

“Coincheck is a pioneer of cryptocurrency exchange businesses and has a global brand,” Matsumoto said.

Coincheck chief executive Koichiro Wada and chief operating officer Yusuke Otsuka will step down from their roles but stay on as executive officers.

“Our objective is to regain customers’ trust and take the lead in the industry,” Monex managing director Toshihiko Katsuya, who will take over the role of CEO, told the news conference.

Monex shares surged nearly 40 percent since local media first reported the deal earlier this week.

Two exchanges suspended

In March, Japan’s Financial Services Agency (FSA) ordered five cryptocurrency exchanges, including Coincheck, to make improvements to their business operations, while slapping two exchanges with suspension

orders.

On Friday the FSA imposed fresh punishments, ordering Yokohama-based FSHO to temporarily halt operations for two months - partly for not establishing a system for risk management despite the watchdog’s

instructions.

The FSA also ordered the “Eternal Link” exchange to suspend operations for two months and issued an improvement order to a Tokyo-based exchange known as “Last Roots.”

The Coincheck theft exceeded the $480 million in bitcoin stolen in 2014 from another Japanese exchange, MtGox.

That hack in 2014 prompted Japan to issue new regulations, requiring exchanges to obtain a government licence, but Coincheck was allowed to continue operating while the FSA was reviewing its application.

In February, seven plaintiffs, two companies and five individuals, filed a lawsuit against Coincheck seeking the reimbursement of 19.53 million yen in lost virtual currency and further compensation for

interest lost due to the hack.

Japan is a major centre for virtual currencies and as many as 10,000 businesses in the country are thought to accept bitcoin.