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Coincheck

Coincheck

Coincheck is a cryptocurrency exchange based in Tokyo, Japan offering the ability to trade bitcoin, ether, NEM and other cryptocurrencies.

Coincheck is a cryptocurrency exchange based in Tokyo, Japan offering the ability to trade bitcoin, ether, NEM and other cryptocurrencies. The exchange was launched on November 5, 2014 by founders Koichiro Wada and Yusuke Otsuka. Coincheck offers its users two-factor authentication and cold wallets (offline storage of cryptocurrency keys) to ensure their customers security.

Acquisitions
Monex

On April 5, 2018 Monex Group Inc, an online Japanese brokerage, announced that it will purchase Coincheck for $33.6 million. Monex Groups purchase of Coincheck was due to increasing pressures to tighten regulatory standards in Japan related to cryptocurrencies following the theft of $530 million from Coincheck in January 2018.

Understanding Coincheck

Coincheck began operating in 2012 under its parent company, Rejupress. It first offered basic exchange services until rolling out payment and lending systems in 2016.

Coincheck made headlines in January 2018 when hackers were able to transfer $534 million worth of NEM, a cryptocurrency, out of their digital wallets. These wallets were “hot wallets,” meaning they were connected to the Internet (as opposed to “cold wallets,” which allow offline storage of a cryptocurrency). When Coincheck executives announced that the theft had occurred, the news sent cryptocurrency prices tumbling. The company indicated that it would reimburse its customers for their losses.3

Coincheck is not yet available for U.S. residents to use due to regulatory issues.

In April of 2018, Coincheck was acquired by Monex Group, Inc., an online brokerage with a significant footprint in the financial world. It operates retail brokerages in Japan, the U.S., China, and Australia. In 2019, Coincheck was approved by the Japanese government to again operate as a cryptocurrency exchange.

How Does Coincheck Work?

The Coincheck exchange matches the bids and offers of customers, with the settled price representing the lowest price the seller is willing to accept and the highest that a buyer is willing to pay. Customers can deposit fiat currency in order to conduct transactions.

Coincheck does not charge a transaction fee, but it does charge fees for deposits and withdrawals. The fee amount depends on the currency that transfers, withdrawals, and payments are being made in. Fees are also levied on executed swap orders. Fees for transferring cryptocurrencies are denominated in the token that is being transferred. For example, if you used Bitcoin, your fees would be charged in bitcoin.4

In addition to offering exchange services, Coincheck also operates Coincheck Payment. This service allows businesses to accept payments in bitcoins. For e-commerce websites, Coincheck Payment uses an API to handle transactions. Retailers can also use Coincheck Payment by downloading an application. Businesses must create an account, complete SMS authentication, submit identification documents, and download the application.5

Coincheck Developments

Coincheck continues to expand its exposure to markets. In March 2021, Coincheck started Coincheck NFT, the first NFT marketplace in Japan. In March 2022, Coincheck announced it was merging with Thunder Brige Capital Partners IV, a special purpose acquisition company. It will be listed on Nasdaq under the ticker CNCK.6

In May 2022, the exchange announced it had acquired "Otherdeed" land within a metaverse project called Otherside from Yuga Labs, the Bored Ape Yacht Club NFT creators. Otherside is a metaverse gaming experience where non-fungible token owners can turn their NFTs into playable avatars. Coincheck intends to offer the NFT on its NFT exchange.7

Regulatory Concerns

Japan has been far more open to the use and development of cryptocurrencies than many other countries. The country has one of the world's most progressive regulatory climates for cryptocurrencies. It has recognized Bitcoin and other digital currencies as legal property under the Payment Services Act since April 2017.8

Japanese users can pay their gas and electric bills with their Coincheck app and account. They can also lend cryptocurrency to the exchange and earn a maximum of 5% interest.9

After Coincheck was hacked, Japan’s Financial Services Agency (FSA) launched an investigation into the company, resulting in the conclusion that Coincheck did not have a license from the FSA at the time of the theft.3

Under the Payment Services Act, the FSC required that all cryptocurrency exchanges in the country implement strict know-your-customer (KYC) and anti-money laundering (AML) policies. The exchange has since registered and complied with FSC regulations.

Outlook for Coincheck

Coincheck's future is unclear, similar to other exchanges and cryptocurrency-related businesses. The cryptocurrency market is volatile because it is still establishing itself. Non-fungible tokens and other blockchain-related assets may or may not hold value or persist into the future. Considering this, Coincheck appears to be taking steps to remain relevant in a young industry.

By going public on a U.S. exchange and entering the metaverse playing field, Coincheck is signaling that it believes it should expand its product and service base to meet market circumstances and future developments. Many large, established tech corporations like Microsoft, Meta, and Alphabet are working to create the Metaverse and the next generation of the web—it makes sense for an exchange to position itself to try and take advantage of developing technologies.

Is Coincheck Safe?

Coincheck is safe in that the exchange is licensed and regulated by Japanese regulatory authorities.

How Do You Use Coincheck?

To use Coincheck's services, you need to create an account and deposit funds into your account. You can then buy and sell cryptocurrency on the exchange.

Does Coincheck Have a Coin?

Coincheck is an exchange and doesn't have a cryptocurrency, blockchain, or coin of its own. The exchange offers about 16 cryptocurrencies and a growing list of NFTs on the marketplace.

Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein.

Timeline

January 29, 2018
500 million NEM stolen from Coincheck exchange

The digital wallets containing Coincheck's reserves of 500 million NEM were hacked, representing the largest cryptocurrency hack in history to date. Estimates from COO Yuske Otsuka place the value in USD of the NEM coins stolen at ~$533 USD, although given the highly volatile valuation of the currency estimates range widely.

Coincheck has promised to partially refund the 260,000 investors affected by the theft.

November 5, 2014
Coincheck exchange launched

The Coincheck cryptocurrency exchange was launched on November 5, 2014.

Products

Patents

Further Resources

Title
Author
Link
Type
Date

$530 million cryptocurrency heist may be biggest ever

Daniel Shane

Web

$530 Mln in XEM Stolen From Coincheck Can Be Traced, NEM Team Confirms

Joseph Young

Web

Japan's Coincheck Launches Consumer-Focused Bitcoin Exchange

Jon Southurst

Web

NEM Skyrockets as Coincheck Resumes Trading, Altcoins Trade Up Amidst Bitcoin Stability | NewsBTC

Cole Peterson

Web

References

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