Digital currency exchange operator Coincheck Inc. resumed on Tuesday yen withdrawals for its users following weeks of suspension triggered by a massive cryptocurrency theft, while submitting to regulators a report vowing to improve its security system.
The Tokyo-based company, which has been under fire following the theft of 58 billion yen ($540 million) worth of NEM currency, said it completed the same day the transfer of around 40.1 billion yen, responding to withdrawal requests made by Sunday afternoon.
"We're making progress step by step," Yusuke Otsuka, an executive of Coincheck, told reporters but did not elaborate on when the company would compensate some 260,000 holders of NEM coins to the tune of 46 billion yen.
Coincheck had suspended cryptocurrency trading as well as transfer services of the yen and the NEM currency after the largest-ever virtual currency theft came to light on Jan. 26, saying it would confirm the safety of its platform.
Otsuka said the company will continue to respond to requests for yen withdrawal but was unclear about when trading would resume on the exchange.
In the report submitted to the Financial Services Agency, Coincheck vowed to compensate for users' losses, clarify the responsibility of the management and enhance security through such measures as storing the cryptocurrency offline.
The FSA, Japan's financial watchdog, had ordered Coincheck to report back on steps to prevent a similar theft by Tuesday. The agency also conducted on-site inspections on Feb. 2 to see if the exchange operator has a proper risk management system in place.
Financial Services Minister Taro Aso said the FSA will urge Coincheck to prioritize customer protection.
"Through our on-site inspections, we'll make sure customers are protected," he told reporters after a Cabinet meeting.
FSA inspectors have been checking if Coincheck has the financial strength to reimburse money to the holders of NEM coins, as the company has pledged.
Coincheck is one of 16 operators of virtual currency exchanges awaiting regulatory approval. Another 16 have already won approval under the country's revised funds settlement law requiring exchange operators to register.
The law took effect last April, after another Tokyo-based cryptocurency exchange, Mt. Gox, shut down in 2014 following 48 billion yen worth of bitcoins being stolen.
Also Tuesday, the FSA issued a warning, the first of its kind under the law, to Macao-based cryptocurrency exchange operator Blockchain Laboratory Ltd. for not having registered with the government.
The growing popularity of digital currencies has boosted expectations for their greater use, but it also sparked debate about how to regulate them globally.
The latest heist has raised calls for stricter oversight of the industry.
Bank of Japan Governor Haruhiko Kuroda said before a Diet committee Tuesday that virtual currency "does not have assets to back it up and has become a target for speculation."
The FSA has already urged all exchange operators in Japan to report how they manage risks to protect customer assets and expanded its on-site inspections beyond Coincheck. It plans to cover all of them over the next few months.
