The hacking of a major Japanese cryptocurrency exchange is also helping to bring traditional financial services providers into the crypto market. On January 26, 2018, over $500 million was hacked from Coincheck, a cryptocurrency exchange; however, the exchange has since been sold to Monex Group, a large financial conglomerate.
In Japan, Bitcoin was formally legalized in 2016 as a payment method. The official legalization of cryptocurrency in many ways came in response to previous hacking incidents, especially that which targeted Mt. Gox, another large Japanese cryptocurrency exchange. In 2014, around $473 million in Bitcoin was suddenly stolen from investors who stored their currency at the site.
Following the Coincheck hack, the Japanese Financial Services Agency inspected cryptocurrency exchanges in the country. Eight were issued business improvement notices, while three more crypto exchanges were ordered to temporarily halt their activities.
As Coincheck seeks to recover, it has begun to refund users and restart trading activities. It has not reopened its market in NEM, the particular cryptocurrency targeted in the hack. Most recently, the company accepted Monex's $33.5-million offer to acquire 100 percent of the exchange. As the news was confirmed on April 6, the company's share price shot up by 20 percent.
This presents an alternative route for companies hit by hacking; the Mt. Gox example, which led to bankruptcy, ongoing lawsuits and a lack of refunds, was the previous case study for post-hack cryptocurrency exchanges. Some may question the price tag placed on Coincheck by Monex Group, especially given that Coincheck has continued cash flow and should be able to repay its users. There may be future additional payments made for Coincheck, depending on how well the company fares. Monex has denied that the low price is due to risk, and Coincheck officials noted that they accepted the offer in order to move forward quickly with recovery.
The cryptocurrency exchange will now become a wholly owned subsidiary of Monex Group and a part of its "new beginning." Monex previously had formed a cryptocurrency lab and has expressed interest in integrating Coincheck's knowledge of blockchain technology in other aspects of its business model. To date, both crypto and traditional stock exchange markets have responded positively to the news, presenting the possibility of a new path forward for cryptocurrency exchange recovery after major hacking incidents.