UPDATED 22:18 EDT / MARCH 08 2018


Bitcoin drops again as Japan launches new crackdown on cryptocurrency exchanges

Bitcoin and cryptocurrency markets were again shaken Thursday as the Japanese government launched a new crackdown on cryptocurrency exchanges.

Japan has been at the forefront of legalizing cryptocurrency trading, having first licensed exchanges in October. But it now has punished seven cryptocurrency exchanges in the country, suspending the operation of two, in response to security concerns raised after the hacking of Coincheck in January.

Bit Station and FSHO were the two exchanges ordered to halt operations for a month, according to Forbes. Regulators found that a Bitstation executive previously used customer funds for personal transactions, while FSHO is alleged to have failed to shore up customer protection. Five other exchanges — Tech Bureau, GMO Coin, Lemuria Bitcoin Exchange, Mister Exchange and Coincheck — were given “administrative penalties” that ordered them to improve their risk management to prevent further cyberhacks.

The intervention of Japan’s Financial Services Agency comes despite efforts from the industry to regulate itself better. A report Feb. 20 noted that 16 exchanges in the country were joining forces to create a self-regulating body that will oversee cryptocurrency markets.

The timing of the news wasn’t great for said markets, coming on top of growing uncertainty caused by U.S. regulatory fears along with rumors that a major exchange had been hacked.

The U.S. Securities and Exchange Commission said in a statement earlier this week that all cryptocurrency trading sites needed to be registered with the agency as exchanges because the commission had deemed cryptocurrencies meet the definition of a “security” under federal securities laws.

Across the Pacific, rumors swirled that Hong Kong-based exchange Binance had been hacked. The company denied the claims and evidence emerged that it was third-party services that were stealing funds from customers, but Binance then shared details of a plot by “well organized” hackers to manipulate the market and steal some of its users’ digital coins.

The news out of Japan caused bitcoin to plunge by nearly $1,000. After trading near $10,000 until 11:40 a.m. EST, bitcoin dropped as low as $8,917.92 as of about 9 p.m. before settling somewhat to $9,015.53 as of a little after 10 p.m. Ethereum, which was trading at $741.25 this time yesterday, also suffered, falling $62, to $679.04.

Photo: Martin Lewison/Wikimedia Commons

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