Such an irresponsible management attitude that ignores users' security is unpardonable. Because this is a new category of business, operators in this industry as a whole should take this seriously as a mistake to learn from.
Virtual currency exchange operator Coincheck Inc. was hacked through the internet and robbed of NEM cryptocurrency it handled.
The amount lost was 58 billion yen worth of cryptocurrency, one of the largest incidents involving virtual currency trading, in which electronic data is exchanged. The company said it will repay all 260,000 customers who lost their NEM coins in the theft.
Coincheck had kept the NEM in customer accounts on computers connected to the internet. It is common sense in the industry that if the accounts on computers are not cut off from the internet, there is a heightened danger of the virtual currency being siphoned. The company had not even introduced recommended cryptographic technology. Coincheck can be considered to have utilized just a slipshod, vulnerable management arrangement.
The exchange operator emphasized securing customers, for instance, through TV commercial messages using a well-known TV personality. The company seems to have prioritized expanding its operations while putting security measures for its system on the back burner.
Virtual currency exchange operators generally act as a brokerage in the trading of virtual currency, while holding customers' assets for them.
Under the revised law on fund settlements, which came into force in April last year, exchange operators are required to protect users. Regarding the custody of virtual currency, operators are obligated to make a sincere effort to keep users' virtual currency separated from the internet.
Global regulation vital
It is important to discuss whether such regulations are sufficient from the viewpoint of improving the rules to protect users.
This time, the Financial Services Agency issued a business improvement order to Coincheck. Not only Coincheck, but all other electronic currency exchange operators must take such a stance as actively disclosing the safety of their systems, their management conditions and so forth.
The majority of virtual currency exchange trading is believed to be conducted as speculative trading in expectation of a price rise, rather than for shopping or a money transfer.
Users of virtual currency exchanges need to be fully aware of the risks involved with an immature market, regarding its rules and business operators' experience. Prudence is also essential in choosing currency exchange operators.
More than 1,000 virtual currencies are available today, with their current worth totaling on the scale of 60 trillion yen.
In South Korea, virtual money worth 9.2 billion yen was stolen last year, allegedly via cyber-attacks from North Korea. As virtual currencies are highly anonymous, fears cannot be dispelled, for example, of their being abused in money laundering or used as funds for terrorism.
As they are traded online, there are effectively no border barriers. Even if some countries reinforce their regulations, it remains unclear how effective such regulations will be.
At a meeting of finance ministers and central bank governors of the Group of 20 nations and a region to be held in March, France and Germany are expected to make a proposal for global regulation of virtual money. Japan also needs to actively take part in the discussion and promote consensus-building among the members.
(From The Yomiuri Shimbun, Jan. 30, 2018)
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