Japan was shocked by the $500 million hack of the cryptocurrency exchange a few months back. Ever since then, the financial services agency is conducting proper inspections before issuing any licenses to the cryptocurrency exchanges. Up until now, the financial services agency of Japan has not rejected the application of any cryptocurrency exchange. However, recently, the agency has issued its first rejection to a cryptocurrency exchange.
Report by Financial Services Agency
The application by FSHO was rejected by the FSA. According to the agency, this was due to the lack of compliance with the suggestions of the agency. The agency had visited the premises of the exchange a few months back. It had submitted its suggestions to the cryptocurrency exchange. However, the cryptocurrency exchange was not able to implement the suggestions.
According to the agency, some of the AML measures were also lacking. The know your customer rules were also not being followed. As a result, it was forced to issue a suspension.
The suspension order was delivered on March 8. It also provided the cryptocurrency exchange with a one-month term. On March 23, a second inspection was also conducted. This was to verify whether there were any improvements in the rules and regulations which are abided by the cryptocurrency exchange. Due to the lack of proper implementation of its suggestions, a second notice was served to the cryptocurrency exchange on April 6.
Finally, the agency asked to the cryptocurrency exchange to halt its operations. The cryptocurrency exchange was required to halt the operations till they abide by the rules and regulations. One of the main problems which the agency had with the cryptocurrency exchange was that they did not cooperate with the officials from the agency.
According to the agency, even though there were drastic changes to the management but the day-to-day operations of the company were effectively controlled by the older management. After this comment from the agency, the new management has resigned after meeting with the shareholders.
The agency finally stated that as the cryptocurrency exchange did not abide withthe suggestions, they had no other option but to reject the application of the cryptocurrency exchange. In this case,the agency provided quite a few opportunities to the cryptocurrency exchange to improve but it did not show any improvement. The first rejection has sent shock waves in the cryptocurrency community but it seems like in this case, the cryptocurrency exchange was at fault.
