Regulations

Japanese watchdog charges a crypto exchange owner with legal violations

After the Japanese financial watchdog investigated Fisco, the owner of Zaif crypto exchange, it has imposed an order to improve the exchange’s management systems.

Early this year, the Financial Services Agency (FSA), Japan’s financial watchdog, visited Fisco which in April took over ownership of the hacked Zaif crypto exchange. The visit unearthed that the company had made several legal violations.

Zaif stated that the exchange noticed unusual outflow of funds on the platform around 17:00 Japan time on September 14, 2018 after which the company later halted withdrawals and deposits.

After further investigations, the tech bureau discovered that the hackers had unauthorized access to the exchange’s hot wallet.

FSA realized the problem with the firm’s business management; for instance, the board of directors had not been discussing important management issues like business plans. Additionally, the firm had no plans to handle issues like money laundering and financing of terrorism.

According to FSA, “management did not recognize the importance of legal compliance.”

To realize the expectation of the company, the agency has handed Fisco a business improvement order, mandating it to develop a system that allows proper accounting, auditing, and outsourcing. The company has to set up a risk management system for cryptocurrency and fiat. Zaif lost approximately 7 billion yen ($62.5 million) in Bitcoin (BTC), Bitcoin cash 9BCH) and monacoin (MONA), in its September 2018 hack.

In October the same year, Fisco announced its intention to take over the ailing firm. And in April this year, the firm finally completed the acquisition.

According to reports by Reuters back in April, the FSA is also investigating Huobi Japan alongside Fisco. However, no public statement has been made by the agency on any conclusions about the investigation.

Do you think FSA’s hard stand on Fisco will help prevent cryptos being used to launder money and finance terrorism?

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Japanese messaging giant LINE may soon launch a cryptocurrency exchange

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coinmag

Philip is an experienced blogger keen on staying updated with trends and news surrounding the blockchain and Bitcoin space. With several years of freelance experience in various industries, Philip brings his knowledge and experience into the crypto space.

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