Business 30 October 2018Erik Gibbs
Coincheck crypto exchange loses $5 million in Q3
This past January, Japanese cryptocurrency exchange Coincheck was hacked, resulting in the loss of $520 million in cryptocurrency assets. Not long after, it was acquired by brokerage firm Monex Group, but it doesn’t seem that its financial troubles have dissipated. In a release (in pdf) of its financial performance for the third quarter, the company said that it has seen a significant decline in revenue.
Between July and September, Monex Group’s cryptocurrency business, which is entirely comprised of the Coincheck exchange, took in around $2.8 million. This is a 66% decline over what it reported for the previous quarter, which was approximately $8.4 million. Since acquiring the exchange, Monex has reported losses of around $7.5 million.
The decline, according to Monex, can be directly attributed to the hack. Despite a reduction in costs for the most recent quarter, there has been an increase in the loss to the company, jumping from $2.3 million in the second quarter to $5.25 million in the last. Monex explained, “Since the service suspension in January 2018, Coincheck only allowed existing customers to sell their cryptocurrency. This limited revenue stream resulted in segment loss of [$5.33 million]. Coincheck has improved in governance, internal control and internal audit, aiming for full service resumption.”
Monex purchased Coincheck for $33.5 million following the hack. The platform has seen around $4 million in trades during the last 24 hours, according to CoinMarketCap. The exchange has around 1.7 million users and is in the process of implementing increased security features and internal controls in order to become licensed by Japanese regulators.
It further indicated that Coincheck “has built sophisticated internal controls, including a high-standard security management system, which has recently become expected for registered cryptocurrency exchanges. Going forward, Coincheck will advance as a highly technology-driven company with a cutting-edge security control system and the know-how to secure profitability appropriate of its true value.”
While the loss from the hack was certainly tremendous, some good did come out of it. It paved the way for increased scrutiny of exchanges and more oversight to ensure the cryptocurrency industry in the country can flourish and mature as a viable entity. This goes a long way to ensure that crypto is seen as a legitimate currency that can rival fiat over the long term.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
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