The disclosure that one of Japan’s biggest cryptocurrency exchanges lost about US$400 million in NEM tokens is spooking investors in a nation still wary of such venues four years after the collapse of Mt. Gox.
After hours of speculation on Friday night, Coincheck Inc said the coins were sent “illicitly” outside the venue.
Cofounder Yusuke Otsuka said the company did not know how the 500 million tokens went missing, and the firm is working to ensure the safety of all client assets.
Coincheck said earlier it had suspended all withdrawals, halted trading in all tokens except bitcoin, and stopped deposits into NEM coins.
“We know where the funds were sent,” Otsuka said during a late-night news conference at the Tokyo Stock Exchange. “We are tracing them and if we’re able to continue tracking, it may be possible to recover them, but it is something we are investigating at the moment.”
The disappearance likely ranks among the biggest losses or thefts of investor assets since the advent of digital currencies with the launch of bitcoin in 2009.
The Japanese Financial Services Agency (FSA) said in a statement it is “looking into the facts surrounding Coincheck.”
NEM, the 10th-largest cryptocurrency by market value, fell 11 percent over a 24-hour period to US$0.87 as of 2:30pm yesterday Tokyo time, according to Coinmarketcap.com.
Bitcoin on Friday dropped 3.4 percent and Ripple retreated 9.9 percent, according to prices available on Bloomberg.
“I’m shocked,” Takeshi Fujimaki, an opposition Japan Innovation Party politician who once served briefly as an adviser to billionaire investor George Soros, said on Twitter.
He wrote that he has an investment of more than ¥10 million (US$92,000) worth of bitcoin in Coincheck.
In Japan, one of the world’s biggest markets for cryptocurrencies, policymakers have introduced a licensing system to increase oversight of local venues, seeking to avoid a repeat of the Mt. Gox exchange collapse that roiled cryptocurrency markets worldwide in 2014. At that time, the theft of bitcoin was estimated at about US$450 million, although the figure was revised down later.
Coincheck had applied with the agency for a license as an exchange and was able to continue operating under the FSA’s rules while awaiting a decision. As a result, Coincheck falls under the supervision of the agency, an official said.
Cryptocurrency exchanges, many of which operate with little to no regulation, have experienced a spate of outages and hacks amid the trading boom that propelled bitcoin and its peers to record highs last year.
“What’s the lasting impact? It’s hard to tell,” ADM Investor Services International global strategist Marc Ostwald said. “Japan is one of the most pro-crypto trading countries among the G20. In Japan they don’t really want a wholesale clampdown, so it will be interesting how Japanese regulators respond to this, if they indeed do.”
Like bitcoin, NEM is a cryptocurrency built on top of blockchain, but it uses a more environmentally friendly method to confirm transactions, its Web site says. Bitcoin mining requires significant computing power, while NEM says it does not.
Coincheck, founded in 2012, had 71 employees as of July last year with headquarters in Shibuya District, an area popular with start-ups that was also home to Mt. Gox, Coincheck’s Web site says.

US sports leagues rushed to get in on the multi-billion US dollar bonanza of legalized betting, but the arrest of an National Basketball Association (NBA) coach and player in two sprawling US federal investigations show the potential cost of partnering with the gambling industry. Portland Trail Blazers coach Chauncey Billups, a former Detroit Pistons star and an NBA Hall of Famer, was arrested for his alleged role in rigged illegal poker games that prosecutors say were tied to Mafia crime families. Miami Heat guard Terry Rozier was charged with manipulating his play for the benefit of bettors and former NBA player and

The DBS Foundation yesterday announced the launch of two flagship programs, “Silver Motion” and “Happier Caregiver, Healthier Seniors,” in partnership with CCILU Ltd, Hondao Senior Citizens’ Welfare Foundation and the Garden of Hope Foundation to help Taiwan face the challenges of a rapidly aging population. The foundation said it would invest S$4.91 million (US$3.8 million) over three years to foster inclusion and resilience in an aging society. “Aging may bring challenges, but it also brings opportunities. With many Asian markets rapidly becoming super-aged, the DBS Foundation is working with a regional ecosystem of like-minded partners across the private, public and people sectors

BREAKTHROUGH TECH: Powertech expects its fan-out PLP system to become mainstream, saying it can offer three-times greater production throughput Chip packaging service provider Powertech Technology Inc (力成科技) plans to more than double its capital expenditures next year to more than NT$40 billion (US$1.31 billion) as demand for its new panel-level packaging (PLP) technology, primarily used in chips for artificial intelligence (AI) applications, has greatly exceeded what it can supply. A significant portion of the budget, about US$1 billion, would be earmarked for fan-out PLP technology, Powertech told investors yesterday. Its heavy investment in fan-out PLP technology over the past 10 years is expected to bear fruit in 2027 after the technology enters volume production, it said, adding that the tech would

YEAR-END BOOST: The holiday shopping season in the US and Europe, combined with rising demand for AI applications, is expected to drive exports to a new high, the NDC said Taiwan’s business climate monitor improved last month, transitioning from steady growth for the first time in five months, as robust global demand for artificial intelligence (AI) products and new iPhone shipments boosted exports and corporate sales, the National Development Council (NDC) said yesterday. The council uses a five-color system to measure the nation’s economic state, with “green” indicating steady growth, “red” suggesting a boom and “blue” reflecting a recession. “Yellow-red” and “yellow-blue” suggest a transition to a stronger or weaker condition. The total score of the monitor’s composite index rose to 35 points from a revised 31 in August, ending a four-month