Monex's Coincheck Vs Mt. Gox: Can Traditional Finance Save A Hacked Crypto Exchange?

The aftermath of the January 26 hack of more than $500 mln worth of NEM from Japanese crypto exchange Coincheck has led to a regulatory re-examination of Japan's crypto industry, so far culminating in the $33.5 mln sale of the hacked exchange to Japanese financial services provider Monex Group.

This January's Coincheck hack, which came four years after the almost-equally large Mt. Gox hack, prompted Japan's Financial Services Agency to inspect and issue business improvement notices to eight of Japan's crypto exchanges currently awaiting registration, including Coincheck, while temporarily halting the activities of three more.

Coincheck has also been hit with several lawsuits from crypto traders both over their decision to freeze withdrawals of all cryptocurrencies right after the attack as well as generally suing for damages of up to around $800,000.

Now four months after the attack, Coincheck has already begun partially refunding users, as well as unfreezing the withdrawals and trading of several cryptocurrencies on the exchange, not including NEM.Monex acquires CoincheckAs the latest step in Coincheck's efforts to keep the exchange moving forward in its plan to keep operations running and file for registration as an official crypto exchange in Japan, the company has decided to accept the Monex Group's offer of 3.6 bln yen for the acquisition of 100 percent of the shares in Coincheck.

The news of Monex Group's acquisition of Coincheck sent the company's share price way up, showing an increase of almost 20 percent by traditional market's close on April 6.

Why such a low price tag?The $33.5 mln price tag for 100 percent of Coincheck's shares unquestionably seems low, especially considering the fact that Coincheck allegedly has enough cash flow to pay back all 260,000 users who lost NEM in the hack.

Koichiro Wada, the CEO of Coincheck, said at an April 6 press conference that Coincheck had chosen to accept Monex's offer among the other bidders for the sake of expediency.

Monex's acquisition of Coincheck will take place on April 16, and while Coincheck founders Koichiro Wada and Yusuke Otsuka will leave their CEO and Director positions, they will remain connected to Coincheck as operating officers.

The traditional markets' positive response to the news of the acquisition of Coincheck by a otherwise traditional financial services provider may be a vital piece of the puzzle for building legitimacy for a hacked crypto exchange.

While the future of Coincheck cannot be determined with any certainty, as the FSA sends out a string of business improvement and halt notices to crypto exchanges, perhaps Monex Group's support of Coincheck will lend the security that the exchange needs to overcome the blows to both the company's finances and reputation caused by the massive hack.