Japan Watchdog Orders Improvements After Fisco Crypto Exchange ‘Violations’
Cryptocurrency exchange owner Fisco is being forced to improve its business management systems after an investigation by the country’s financial watchdog.
According to a release from the Financial Services Agency (FSA), on Feb. 13, the agency visited Fisco – a Japanese investment firm that took over ownership of the hacked Zaif exchange in April – and found that the firm had made a number of “legal violations.”
The FSA said it found “problems” with the firm’s business management – for example, the board of directors had not been discussing “important management issues such as business plans.” Risk management at Fisco, relating to potential issues like money laundering and financing of terrorism, was also found to be lacking, as did other aspects of general business management, such as its outsourcing process.
The FSA said “management did not recognize the importance of legal compliance.”
To bring the company back in line with its expectations, the agency has handed Fisco a business improvement order, mandating it to establish a system to allow proper internal management, outsourcing, accounting and auditing. The firm must also set up risk management systems for fiat and cryptocurrency.
In its September 2018 hack, Zaif lost approximately 7 billion yen ($62.5 million) in bitcoin (BTC), monacoin (MONA) and bitcoin cash (BCH).
A month later, Fisco announced its intention to take over the ailing firm and finally completed the acquisition in April, at which point normal services were resumed for the first time since the hack.
The FSA was said to also be investigating Huobi Japan alongside Fisco, according to a Reuters report in April. No public statement has so far been made by the agency on any conclusions, however.
FSA image via Shutterstock