Japan has issued its first official rejection of a crypto exchange application. This announcement was released by the Financial Services Agency (FSA) in June, 2018, confirmed that the regulator would officially reject FSHO’s application – its first such refusal – after two suspension orders sent to the firm in March and April, 2018.
The rejection order further explained that the FSA’s decision was made on the basis that the exchange hadn’t been improving its internal operations during the past three-month period of suspension .
FSHO’s operation was at a standstill as the regulator found its know-your-customer (KYC) and security measures were unavailable and after the FSA launched a site check over domestic exchanges following the unprecedented US$500M Coincheck hack in January.
However, the FSA alleged that a large part of the issue originate in the unwillingness of FSHO to cooperate with the officials.
The delegated auditors and lawyers were authorized to form a new management team for the company on May 6, a move that came after the second suspension order on April 6. Nevertheless, the FSA indicated for issues that are “extremely important in terms of management”, the former management team would still continue without the consent of the newly appointed delegates. But in effect, the former management had still controlled, the regulator said.
Furthermore, the former management also hosted a general shareholder meeting on June 4 where it decided that the new management team establishment on May 6 was invalid, while the new team was “totally absent”, explained the FSA.
Hence, the delegated lawyers and auditors resigned, according to the regulator.
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