Trend in Japan: Large Crypto Exchanges Get Hacked, Conglomerates Take Over
In Japan, the largest crypto exchange market in the world, a new trend has emerged; large conglomerates have started to acquire hacked digital asset trading platforms as a way to enter the cryptocurrency sector.
Since the $500 million security breach of Coincheck, formerly the most widely utilized
cryptocurrency trading platform in Japan, the country’s main financial watchdog Financial Services Agency (FSA) has tightened regulatory frameworks around digital asset exchanges.
Particularly, the FSA has vowed to impose stricter policies pertaining to investor protection and platform security to ensure that cryptocurrency exchanges, at least those approved and licensed by the FSA, are robust enough to handle billions of dollars on a daily basis.
The efforts of the FSA to expand its crypto department to handle massively increasing demand towards cryptocurrencies by local conglomerates were praised by companies within Japan and the rest of the global market.
But, with 160 companies planning to apply for licenses to operate as cryptocurrency exchanges in Japan in the upcoming months, it remains unsure whether the FSA will continue to license more exchanges in the short-term, especially after the recent high profile cryptocurrency hack of Zaif.
In January, Coincheck experienced the largest hacking attack in history, losing more than $500 million worth of XEM, the native cryptocurrency of NEM. Fortunately, the company was able to cover the funds of investors that were lost in the hack and initiated the process of compensating traders.
Subsequent to the security breach, Coincheck was acquired by Oki Matsumoto, former Goldman Sachs executive and the CEO of Monex, at a mere $34 million. Compared to the acquisition of Poloniex by Circle at a valuation of $400 million, Coincheck was sold for less than 10 percent of the valuation of the US-based exchange, even though at its peak, it was processing a daily volume that was nearly 100-fold larger than that of Poloniex.