Cryptocurrencies drop after Japanese exchange halts withdrawals

A logo of Bitcoin is seen on an advertisement of an electronic shop in Tokyo, September 5, 2017. — Reuters pic
A logo of Bitcoin is seen on an advertisement of an electronic shop in Tokyo, September 5, 2017. — Reuters pic

TOKYO, Jan 26 — Cryptocurrencies slumped after one of Japan’s biggest Bitcoin venues halted client withdrawals, spooking investors in a country that’s still wary of digital-token exchanges four years after the collapse of Mt. Gox.

Coincheck Inc, based in Tokyo, said in a series of tweets that it had suspended all withdrawals, halted trading in all tokens except Bitcoin, stopped deposits into NEM coins and was preparing “detailed announcement” on the situation. When reached by phone, an exchange official wouldn’t provide further details and didn’t respond to a subsequent emailed request for comment. Additional calls to Coincheck went straight to voicemail.

Japan’s Kyodo News, citing unidentified sources, reported that part of Coincheck’s NEM had “disappeared” from the exchange, without elaborating. Twitter was inundated with reactions from Japanese people, some who flocked to Coincheck headquarters. Live streaming on Twitcasting showed local media stationed outside the office, seeking response. 

NEM, the 10th-largest cryptocurrency by market value, fell 14 percent to 81 cents in the 24 hours through 8.44am New York time, according to Coinmarketcap.com. Bitcoin dropped 5.8 percent and Ripple retreated 10 percent in that period.

“Investors and traders are very sensitive to any news involving the big exchanges,” said Peter Sin, a trader and co-head of the digital currency sub-committee at ACCESS, a Singapore-based cryptocurrency and blockchain industry association. “This will accelerate price declines.”

Cryptocurrency exchanges, many of which operate with little to no regulation, have suffered a spate of outages and hacks amid the trading boom that propelled Bitcoin and its peers to record highs last year.

Like Bitcoin, NEM is a cryptocurrency built on top of blockchain, but it uses a more environmentally-friendly method to confirm transactions, according to its website. Bitcoin mining requires significant computing power, while NEM says it does not.

In Japan, one of the world’s biggest markets for cryptocurrencies, policy makers have introduced a licensing system to increase oversight of local venues, seeking to avoid a repeat of the Mt. Gox exchange collapse that roiled cryptocurrency markets worldwide in 2014. Coincheck has yet to receive a license, according to the website of Japan’s financial regulator.

“Coincheck is a very well-known exchange in Japan,” said Hiroyuki Komiya, Chief Executive Officer of Tokyo-based Blockchain Technology Consulting. “We’ve seen several outages at various crypto exchanges recently, so the extent and seriousness of Coincheck’s halt isn’t yet clear. We’re all very eagerly awaiting to hear more detail on what’s happening.”

Coincheck, founded in 2012, had 71 employees as of July with headquarters in Tokyo’s Shibuya district, an area popular with startups that was also home to Mt. Gox, according to Coincheck’s website. Last year, it began running commercials on national television featuring popular local comedian Tetsuro Degawa. — Bloomberg

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