Japan's FSA Investigates Huobi Japan and Fisco

The Japanese Financial Services Agency (FSA) raided two crypto exchanges - Huobi Japan and Fisco Cryptocurrency Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term - last week, Reuters reported on Tuesday.

The regulator investigated the exchanges to check if there is any lapse in internal oversight, customer protection, and anti-money laundering measures, two anonymous sources confirmed the publication.

“The FSA investigations were designed to ensure appropriate measures have been implemented for customer protection and legal compliance after the management changes,” the sources told Reuters.

Such a sudden investigation is not new in the Japanese crypto industry as the FSA regularly visited and probed digital currency exchanges amid the $530 million Coincheck heist. Many exchanges received notice from the regulator from the for security lapses, however, later received an operating license from the same.

A change in management

Singapore-based Huobi Global expanded to Japan with the acquisition of government-registered exchange BitTrade last year. Fisco, on the other hand, recently bought another Japanese crypto exchange called Zaif for almost $45 million.

Last September, a cyber attack on Zaif, which resulted in the theft of $60 million worth of crypto, boosted the transferer of the ownership process from its previous owner Tech Bureau.

The Japanese regulator recently granted operating licenses to multiple exchanges including Rakuten Wallet and Yahoo Japan-backed Taotao.

Meanwhile, reports surfaced that Japanese authorities are also planning to tighten crypto exchanges' oversight on cold wallets where most of their clients’ funds are stored. Though cold wallets are significantly more secure than hot wallets, the FSA is worried about internal threats that might make them vulnerable.