The Japanese financial market regulator has raided two crypto exchanges – Huobi Japan and Fisco Cryptocurrency Exchange – last week, Reuters reported on Tuesday.
The Financial Services Agency (FSA) was investigating the exchanges to check if there is any lapse in internal oversight, customer protection, and anti-money laundering measures, two anonymous sources confirmed the publication.
“The FSA investigations were designed to ensure appropriate measures have been implemented for customer protection and legal compliance after the management changes,” sources told Reuters.
Such sudden investigation is not new in the Japanese crypto industry as the FSA was regularly visiting and probing digital currency exchanges amid the $530 million Coincheck heist. Many exchanges received notice from the regulator from the for security lapses, however, later received an operating license from the same.
A change in management
Singapore-based Huobi Global expanded to Japan with the acquisition of government-registered exchange BitTrade last year. Fisco, on the other hand, recently bought another Japanese crypto exchange called Zaif for almost $45 million.
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Last September, a cyber attack on Zaif, which resulted in the theft of $60 million worth of crypto, boosted the transferer of the ownership process from its previous owner Tech Bureau.
I’ll repeat myself and I’m sorry, but Americans & Europeans don’t realize how Asia is WAYYYYYYY ahead in the blockchain/crypto space. Whoever works in that industry needs to go to Seoul, Japan, and China to understand the phenomenon. The future is being built here (or there).
— Alexandre Dreyfus (@alex_dreyfus) April 4, 2019
The Japanese regulator recently granted operating licenses to multiple exchanges including Rakuten Wallet and Yahoo Japan-backed Taotao. Rakuten Wallet, formerly known as Everybody’s Bitcoin, also received notice from the FSA for management lapse.
Meanwhile, reports surfaced that Japanese authorities are also planning to tighten the crypto exchanges oversight on the cold wallets where most of their clients’ funds are stored. Though cold wallets are significantly more secure than hot wallets, the FSA is worried about the internal threats which might make them vulnerable.