Japan's financial watchdog on Thursday took administrative action against seven digital currency exchanges across the country, ordering two of them to suspend business in the first such penalty against cryptocurrency exchanges.
For the second time, the Financial Services Agency slapped a business improvement order on Coincheck Inc., the Tokyo-based operator at the heart of a massive digital money theft. It judged that risk management and consumer protection at Coincheck were insufficient.
The two virtual currency exchange operators -- Bit Station and FSHO -- were ordered to suspend business for a month through April 7 and enhance protection of customer information or assets.
An executive who is a major shareholder in Bit Station misappropriated bitcoin held by its customers, according to the FSA.
The seven operators were required to report back on how to improve their business operations by March 22. The other operators are Bicrements Inc., GMO Coin Inc., Tech Bureau Corp., and Mr. Exchange Inc.
Since the theft of 58 billion yen (about $543 million) worth of digital money from Coincheck in January, the FSA has been stepping up monitoring of virtual currency exchanges through on-site inspections and checking whether they have steps in place for their customer protection and anti-money laundering.
The latest heist from Coincheck came amid the growing popularity of virtual currencies and sparked debate about whether and how to regulate them.
Japan requires all virtual currency exchange operators to register with the government.