After the $534 million hack of Coincheck (Tokyo) in January this year, many in Japan feared that the company would go under, creating chaos in Japan’s vibrant cryptocurrency market. It appears that all is well that ends well. Last week, Japanese online brokerage Monex Group Inc. completed its acquisition of the cryptocurrency exchange, Coincheck, for 3.6 billion yen, roughly $33 million.
Coincheck Earned $490 Million Prior To Hack
After completing the deal, Monex released figures showing that Coincheck had eared 53.2 billion yen ($490 million) in a 10-month period prior to when the theft occurred. The cryptocurrency business in Japan is known to be very lucrative, and the release of Coincheck’s financial figures make that clear. Monex had been considering registering their own cryptocurrency business but decided that acquiring Coincheck, with its infrastructure already in place, would be a better move. At the time that the acquisition was officially announced on April 6, Monex CEO Oki Matsumoto stated at the press conference, “Coincheck is a global leader in cryptocurrency. We aim to synergize their innovative pioneering philosophy and our financial know-how.”
Coincheck’s security was breached on January 26 when hackers broke into the firm’s unsecured digital wallet, making off with NEM currency worth $534 million at the time. Coincheck said that they would pay back all the NEM users who lost funds, which they estimated would cost them the equivalent of $430 million at the time.
Under Monex, Coincheck Likely To Be Approved by FSA
The Financial Services Agency (FSA) has twice given Coincheck business improvement orders and even raided their offices; it seemed doubtful that they would allow the company to continue operations. However, under the management of Monex, Coincheck is likely to be officially registered with the Japanese government and will compete with other rival cryptocurrency exchanges, such as bitFlyer.
In their official statements, Monex, has been very optimistic about the future, even in light of Coincheck’s past. “Coincheck is in the process of enhancing its governance and internal control after receiving the business improvement order from the Kanto Local Finance Bureau concerning the theft of cryptocurrency, NEM, as a result of unauthorized access to its system on January 26, 2018. We aim to build a secured business environment for customers by fully backing up Coincheck’s enhancement process. We will support Coincheck to provide [a] secure environment to customers and to grow sustainably as a socially valuable cryptocurrency exchanger,” the company wrote in a press release.
While some considered Monex’s purchase of the firm a risky investment, it seems more and more like a shrewd business decision. Monex shares rose 20% in value on the day they announced they would be purchasing Coincheck and have continued to trade at relatively higher price.
The hacking of Coincheck ignited concern over the lack of security implemented at Japan’s cryptocurrency exchanges, and sparked a wave of crackdowns by Japan’s Financial Services Agency. There are still several other cryptocurrency exchanges waiting for approval by the FSA that are allowed to operate while their applications are being considered. The Japanese government strongly urges consumers to only trade with registered firms. Monex is banking that they will be able to transform Coincheck into a business with the FSA seal of approval.