Japan's financial regulator, the Financial Services Agency, has taken steps to punish the Coincheck cryptocurrency exchange, after more than $500 billion was stolen from it on Friday.
Coincheck president Wakata Koichi Yoshihiro, and chief operating officer Yusuke Otsuka, said that 523 million NEM tokens were stolen, a loss it estimated at ¥58 billion ($533 million).
Jeff McDonald, VP of the NEM Foundation, said in a statement that is has "a full account" of the stolen tokens, and that none had - at the time - been moved. However, it has no way to recover the funds.
Coincheck has said that it will refund about 90 per cent of the stolen cryptocurrency in yen, out of its own cash holdings.
Regulation looms for cryptocurrencies
Shortly after making the original announcement, Coincheck revealed that it was not registered with the FSA. Cryptocurrencies are still unregulated worldwide, although several countries have been moving to change that: South Korea now restricts who can trade cryptocurrencies within its borders, while Japan has required all new exchange operators to register with the government as of April 2017. Existing operators like Coincheck have been able to continue to function ahead of formal registration.
16 exchanges have registered with the FSA to-date, and another 16 are awaiting approval.
Coincheck said on Friday that it plans to register with the FSA, but that body wasted no time in taking its own actions.
The FSA has ordered Coincheck to make improvements. It suspects that the attack was enabled by a lack of security, and has told the exchange to strengthen its safeguards. Coincheck said that it stored its NEM coins in a ‘hot wallet', rather than the more common offline ‘cold wallet'.
A senior official at the Agency said, "We have to take into account the major impact on society."
In the wake of the hack two trade groups in Japan's cryptocurrency sector have decided to merge to form a self-regulatory body.
The FSA had been encouraging the Japan Blockchain Association - which includes bitFlyer, the country's largest exchange - and the Japan Cryptocurrency Business Association to join forces for some time, but they had been unable to agree on terms until now.
It is expected that the new organisation will make it easier to establish common rules for protecting investors, like managing customer assets separately from the exchange's capital.
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