Bitcoin plunges 20% in Japan fearing inspection

Tokyo: The price of bitcoin dropped 20 per cent in the Japanese markets after authorities on Friday inspected the headquarters of the cryptocurrency exchange operator Coincheck.

They were probing the financial situation in the wake of cyber attacks that took place a week ago, Efe news reported.

The bitcoin traded on Friday below $8,011 after 10.30 a.m. at Coincheck and BitFlyer, two of Japan’s main markets, its lowest price since November 2017.

This represents a drop of more than 10 per cent during the hour after inspection news of Coincheck surfaced, and an accumulated intra-day drop of 20 per cent.

Officials from the Japanese Financial Services Agency (FSA) entered the headquarters of Coincheck in Shibuya to verify whether the company holds sufficient funds to compensate its clients, public broadcaster NHK said.

The authorities wanted to clarify whether Coincheck had the assets of the clients and its own separated; whether it has the necessary liquidity to reimburse its users after more than 58 billion yen disappeared in the hacking last week.

The FSA officials would also inspect whether the company was correcting the security holes that opened the way for the cyber attack; whether it has provided enough information to the 260,000 customers affected.

The Japanese operator has promised that it will reimburse the losses to those affected by what is considered the biggest hack of a digital currency to date. However, it has not specified when it would do so.

The customers affected have begun to putting pressure on the company and were preparing legal actions, they announced on Twitter.

The January 26 cyber attack on Coincheck is reminiscent of the Mt. Gox scandal in 2014.

Mt. Gox was once the largest bitcoin exchange globally but went bankrupt following the disappearance of 850,000 bitcoin units, whose estimated value at that time was about 48 billion yen.