Coincheck is a Japanese bitcoin wallet and exchange service headquartered in Tokyo, Japan, founded by Koichiro Wada and Yusuke Otsuka. It operates exchanges between bitcoin, ether and fiat currencies in Japan, and bitcoin transactions and storage in some countries. In April 2018, Coincheck was acquired by Monex Group for 3.6 billion yen. (US33.4 million)
Coincheck since 2016 has been the trademark name of a numismatic supply company located and trademark registered in the United States since 2016.
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| Founded | Tokyo, Japan (August 2014) |
|---|---|
| Headquarters | Tokyo, Japan |
| Area served | Japan |
| Owner | Monex |
| Founder(s) | Koichiro Wada Yusuke Otsuka |
| Products | Bitcoin exchange
and wallet service |
| URL | Official website |
History of Coincheck
Coincheck started in August 2014 and is operated by Coincheck, inc. (previously ResuPress, inc) (founded in 2012). There were then more than 2,200 merchants using their bitcoin payment solution, just in Japan. Coincheck is a member of JBA (Japan Blockchain Association) and is actively helping to build the Japanese bitcoin community’s usage standards with the government.
Coincheck partnered with SEKAI to support Chinese, Hong Kong, and Taiwan investors to buy Japanese real estate with bitcoin.
2018 hacking incident
In January 2018, Coincheck was hacked and approximately 500 million NEM tokens ($530 million) were stolen. The currency was transferred through a total of nineteen accounts, one of which was found to have no connection with the hacker.
The hack led two of Japan’s crypto-currency trade groups to merge into a new self-regulatory organization. The Financial Services Agency took administrative action by ordering Coincheck to improve its security practices, but did not order the exchange to shut down out of a concern for the protection of its users. Coincheck initially announced that it may not be able to compensate all users affected by the hack, but then announced that it would repay all 260,000 users affected in Japanese yen using its own capital. As of February 2021, the Tokyo Public Prosecutors Office has charged 31 individuals for their involvement in transactions of stolen NEM tokens. In total, these individuals converted around 18.8 billion yen of stolen coins into other cryptocurrencies.
Understanding Coincheck
Coincheck is the seventeenth-largest cryptocurrency exchange in the world, based on traffic, liquidity, trading volumes, and confidence in the legitimacy of trading volumes reported.1 While bitcoins have long been the most traded cryptocurrency on the exchange, customers can also buy, sell, and trade Ethereum and other tokens. A professional version of its exchange platform, Coincheck Tradeview, shares similarities with platforms used to trade fiat currencies, such as the dollar.2
Japan has been far more open to the use and development of cryptocurrencies than many other countries. The country has one of the world’s most progressive regulatory climates for cryptocurrencies and has recognized Bitcoin and other digital currencies as legal property under the Payment Services Act since April 2017.3
Its soft approach to regulation has resulted in some digital asset companies shifting their operations from other Asian countries, such as China and South Korea, which initially took a firmer stance towards cryptocurrency. The popularity of cryptocurrencies in Japan may also be related to a lack of high-return investment options; low growth and low inflation have plagued the economy since the 1990s.
The Coincheck exchange matches the bids and offers of customers, with the settled price representing the lowest price the seller is willing to accept and the highest that a buyer is willing to pay. Customers can deposit fiat currency in order to conduct transactions.
Coincheck does not charge a transaction fee, but it does charge fees for deposits and withdrawals. The fee amount depends on the currency that transfers, withdrawals, and payments are being made in. Fees are also levied on executed swap orders. Fees for transferring cryptocurrencies are denominated in the token that is being transferred, with Bitcoin fees denominated in Bitcoin.4
In addition to offering exchange services, Coincheck also operates Coincheck Payment. This service allows businesses to accept payments in bitcoins. For e-commerce websites, Coincheck Payment uses an API to handle transactions. Retailers can also use Coincheck Payment by downloading an Internet application. Businesses must create an account, complete SMS authentication, submit identification documents, and download the application
Special Considerations
Coincheck Hacking
Coincheck made headlines in January 2018, when hackers were able to transfer $534 million worth of NEM, a cryptocurrency, out of their digital wallets.6 These wallets were “hot wallets,” meaning they were connected to the Internet (as opposed to “cold wallets,” which allow offline storage of a cryptocurrency). When Coincheck executives announced that the theft had occurred, the news sent cryptocurrency prices tumbling. The company indicated that it would reimburse its customers for their losses.7
The theft was the largest since the hacking of Mt. Gox in 2014, when hackers stole an estimated $450 million in digital currencies.8 After the hacking of Coincheck, Japan’s Financial Services Agency (FSA) launched an investigation into the company; at the time of the theft, Coincheck did not have a license from the FSA.7
The news of the theft, coupled with other high-profile hacks of other exchanges, led several governments to weigh in on the cryptocurrency industry. As of March 2021, South Korea has banned those digital assets that it deems “dark coins,” including dash, monero (XMR), and zcash (ZEC). Under the Special Payments Act, the regulator Financial Services Commission (FSC) accused these privacy coins of facilitating money laundering activities.9
The FSC also requires that all cryptocurrency exchanges in the country implement strict know-your-customer (KYC) and anti-money laundering (AML) policies.9 China prohibits any funding for new tokens and has banned trading platforms from engaging in exchanges between the legal tender and virtual currency or tokens. China also has a law that bans cryptocurrency from being recognized as a form of money. (However, it is recognized as a virtual commodity.)10
In the United States, in February 2020, former President Donald Trump’s administration announced its intentions to introduce new regulations for cryptocurrencies that were intended to crack down on their role in money laundering and other illegal activities. The move to increase the transparency surrounding digital currencies was motivated by a growing concern that virtual currencies were being used to anonymously execute illegal transactions (and potentially evade American sanctions).11
