Cryptocurrencies Drop After Japanese Exchange Halts Withdrawals

Cryptocurrencies slumped after one of Japan’s biggest Bitcoin venues halted client withdrawals, spooking investors in a country that’s still wary of digital-token exchanges four years after the collapse of Mt. Gox, according to Bloomberg.

Coincheck, based in Tokyo, said in a series of tweets that it had suspended all withdrawals, halted trading in all tokens except Bitcoin, stopped deposits into NEM coins and was preparing “detailed announcement“ on the situation. Coincheck told financial authorities that tens of billions of yen worth of NEM may have been illegally taken, the Nikkei newspaper reported.

After hours of speculation, Coincheck co-founder Yusuke Otsuka said during a late-night press conference at the Tokyo Stock Exchange that the company didn’t know how the 500 million tokens went missing, but the firm is working to ensure the safety of all client assets. NEM, the 10th-largest cryptocurrency by market value, fell 17 percent to 78 cents in the 24 hours. Bitcoin dropped 5 percent and Ripple retreated 8.8 percent in that period.

Like Bitcoin, NEM is a cryptocurrency built on top of blockchain, but it uses a more environmentally-friendly method to confirm transactions, according to its website. Bitcoin mining requires significant computing power, while NEM says it does not. Coincheck, founded in 2012, had 71 employees as of July with headquarters in Tokyo’s Shibuya district, an area popular with startups that was also home to Mt. Gox.