Japan could suspend and punish several crypto exchanges

Some of Japan’s cryptocurrency exchange operators are about to be slapped with punitive measures by the Financial Services Agency, Nikkei learned on Wednesday.

The agency has been inspecting the exchanges since hackers made off with 58 billion yen ($550 million) worth of NEM coins from Coincheck, a popular exchange based in Tokyo where the heist occurred on Jan. 26.

The FSA is moving against the exchanges for being lax in regard to protecting clients and watching out for money laundering.

It is unclear what exactly the punishments will be or which exchanges will receive the notices, according to Reuters.

Coincheck at least will likely receive a notice to raise its system’s standards, Nikkei reported, which would be the second time it would be told to do so.

In addition, the FSA is set to issue a second business improvement order to Coincheck. The agency will monitor any progress the operator makes toward compensating its clients for losses.

Coincheck suspended its operations the day of the hack. It has since returned any yen its customers were holding with it but has not reimbursed its clients for their cryptocurrency holdings.

The punitive action is expected to be announced by the end of the week.

After the Coincheck heist, the agency said it would inspect each of the country’s cryptocurrency exchanges. The first phase of these inspections is now complete.

Last year, Japan became the world’s first country to regulate cryptocurrency exchanges at the national level. So far 16 exchanges are registered with the authorities, while a further 16 – including Coincheck – were allowed to continue operating while regulators assessed their applications.

The business suspension orders will be issued to exchanges that have been operating while their Payment Services Act applications are being screened. These exchanges will be instructed to improve all aspects of their operations. Exchanges that were already registered are unlikely to be affected.

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