SecProbe.io

United States securities and exchange commission logo
March 23, 2023
Gary Simanson
Chief Executive Officer
Coincheck Group B.V.
Hoogoorddreef 15, 1101 BA
Amsterdam, Netherlands
Re:Coincheck Group B.V.
Amendment No. 3 to
Draft Registration Statement on Form F-4
Submitted January 26, 2023
CIK No. 0001913847
Dear Gary Simanson:
            We have reviewed your amended draft registration statement and have the following
comments.  In some of our comments, we may ask you to provide us with information so we
may better understand your disclosure.
            Please respond to this letter by providing the requested information and either submitting
an amended draft registration statement or publicly filing your registration statement on
EDGAR.  If you do not believe our comments apply to your facts and circumstances or do not
believe an amendment is appropriate, please tell us why in your response.
            After reviewing the information you provide in response to these comments and your
amended draft registration statement or filed registration statement, we may have additional
comments.  Unless we note otherwise, our references to prior comments are to comments in our
January 3, 2023 letter.
Amendment No. 3 to Draft Registration Statement Submitted January 26, 2023
General
1.Please note that we continue to consider your accounting policies and disclosure detailed
in your prior responses and may have further comments.

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Questions and Answers About the Business Combination, page 28
2.Please revise to disclose the potential impact of redemptions on the per share value of the
shares owned by non-redeeming shareholders, by including a sensitivity analysis showing
a range of redemption scenarios, including minimum, maximum and interim redemption
levels.
Risk Factors, page 49
3.We note your added disclosures in response to comment 12 and reissue the comment in
part.  Please revise to describe any material risks:
•From depreciation in your stock price following consummation of the Business
Combination;
•Of increased losses or impairments in your investments or other assets due to recent
disruptions in the crypto asset markets.
We suffered a significant loss of customer funds due to hacking in 2018, page 62
4.We note your disclosure that you are subject to lawsuits relating to the calculation of the
compensation provided to customers who were adversely affected by the 2018 hacking
incident, and there are remaining lawsuits demanding approximately ¥429 million as of
September 2022. If material, please revise to disclose whether you have a litigation
reserve for these lawsuits, and if so, if you believe such reserve is sufficient to cover any
liabilities related to these lawsuits.
We are exposed to credit risks due to our reliance on cryptocurrency exchange brokers, page 75
5.Please provide us with a table identifying all of your cover counterparties and quantifying
the amount deposited as of September 30, 2022 and December 31, 2022. To the extent
material to understanding your counterparty risk, please update the risk factor in this table
accordingly. In addition, to the extent that you have revised or updated your policies and
procedures for selecting cover counterparties or determined to cease doing business with
any particular cover counterparty as a result of recent crypto asset market events, please
revise your disclosure accordingly.
6.We note your statement that if you obtain information that can lead to credit concerns
about the cryptocurrency exchange brokers you deal with (for accounts that hold a portion
of borrowed crypto assets), you take measures to avoid risks. Please revise to provide a
detailed description of the measures you would take in such circumstances.
7.Please revise to disclose recent market developments relating to Binance, your principal
counterparty, including legal and regulatory investigations, reports regarding its transfer
of customers' stablecoin assets, and its cessation of customer deposits and withdrawals of
fiat currency. Discuss:
•Any additional steps you have taken or will take to safeguard amounts you deposited
with Binance;

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•Material changes, if any, you have made or will make to your processes in light of the
current developments relating to Binance;
•Any new material financing, liquidity or other risks you face from such
developments; and
•Any new direct or indirect exposures resulting from such events, and identify any
material concentrations of risk and quantify any material exposures.
Information About Coincheck
Our History, page 187
8.We note that your Representative Director and President, Satoshi Hasuo, currently serves
as the representative director of the JVCEA. Given JVCEA’s role as the self-regulatory
organization for the Japanese cryptocurrency industry and in setting forth the processes
and guidelines under which a crypto asset will be eligible for trading on your platform,
please disclose how Mr. Hasuo, the JVCEA and Coincheck address any conflicts of
interest that result from Mr. Hasuo’s dual positions, and revise your risk factors to discuss
any potential risks and conflicts of interest presented by Mr. Hasuo holding key positions
in both entities simultaneously.
9.We note your disclosure that in October 2018, the JFSA granted the cryptocurrency
industry in Japan self-regulatory status, giving JVCEA the ability to establish standardized
operating procedures, including the ability to set guidelines on the crypto assets that may
be traded by exchange operators. We also note your disclosures on pages 196-198 of the
criteria you use to evaluate new cryptocurrencies for trading, and that you are required to
confirm with the JVCEA that it has no objection prior to the introduction of new
cryptocurrencies for trading on your platforms. Please revise to provide additional details
relating to the guidelines set by the JVCEA on the crypto assets that may be traded by
exchange operators, and disclose whether such guidelines set by the JVCEA are
enforceable.
10.We note your disclosure that in January 2019, you received a license as a crypto asset
exchange service provider from the JFSA after making significant improvements to your
risk management and governance systems. Please revise to provide a detailed description
of the “significant improvements” that you made.
Our Services
Account Management and Custody of Customer Crypto Assets, page 198
11.We note your disclosure that in accordance with your operational policy, most of your
crypto assets are held in cold wallets and the amount of cryptocurrencies held in hot
wallets is maintained at an amount equivalent to less than five percent of the total amount
of crypto assets held in cold wallets (including, for this purpose, both customer crypto
assets in custody and crypto assets you have borrowed from our customers). However, we
note that you record ¥3.7 billion, ¥1.9 billion, and ¥1.8 billion held in hot wallets as of
March 31, 2022, September 30, 2022, and December 31, 2022, respectively, which

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amount to greater than five percent of the total amount of crypto assets held in cold
wallets in the corresponding periods. Please revise or clarify your disclosures.
12.We note your response to comment 31 and related disclosures, and reissue our comment
in part. We also note your policy of holding 100% of deposited customer crypto assets
(other than crypto assets borrowed from customers) in cold wallets. Please revise to
clarify:
•Whether the amounts deposited with cover counterparties, which total ¥1.1 million
and ¥0.4 million as of September 30, 2022 and December 31, 2022, respectively,
comprise in whole or in part customer crypto assets, borrowed customer assets or
company-owned crypto assets; and
•The approximate percentages of amounts held in hot wallets, which total ¥3.7
billion, ¥1.9 billion, and ¥1.8 billion as of March 31, 2022, September 30, 2022, and
December 31, 2022, respectively, that consist of deposited customer crypto assets vs.
borrowed crypto assets.
13.We note your disclosure here that as of December 2022 you held crypto assets totaling
¥12.6 billion, and on page 200 that as of September 2022 you recognized crypto asset
borrowings totaling ¥18.1 million. Please revise your disclosure to provide a breakdown
of the types and amounts of crypto assets and crypto asset borrowings held by the
company as of the date of the financial statements included in your registration statement.
Additional Cryptocurrency-related Services
Coincheck Lending, page 200
14.Please refer to comment 29. In your response and revised disclosure you state that
Coincheck utilizes borrowed crypto assets in order to minimize price risk with respect to
the underlying crypto assets because the terms of the borrowing provide for the return of
the subject crypto assets in kind.  Please tell us in detail and revise your filing to clarify
how borrowing customer crypto assets and selling them to facilitate purchase transactions
from customers minimizes price risk, since it appears that selling the borrowed crypto
assets results in an unhedged position related to the borrowing liability.  Please more
clearly explain how you manage the apparent price risk associated with the borrowing
liability.  Specifically, discuss how significant increases in the prices of crypto assets
would impact the profitability of your Coincheck Lending program.
Our Customers, page 203
15.We note your disclosure that you only offer accounts for crypto asset exchange services to
customers resident in Japan. Please expand your risk factor captioned "We could be
subject to administrative sanctions, including fines, or legal claims.." on page 56 to
discuss the risk that, if U.S. customers are able to access your services, you could be
operating in the U.S. as an unregistered national securities exchange, an unregistered
broker-dealer and an unregistered clearing agency with respect to your crypto asset
exchange services.

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March 23, 2023
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Regulatory Environment
Self-Regulatory Organization and Self-Regulatory Rules on Crypto Asset Exchange Service
Providers, page 208
16.We note your response to comment 24 and your added disclosures on page 209. We note
that you are still subject to the previous JVCEA Pre-Assessment because you are not
currently authorized by the JVCEA as a Green List Eligible Member nor a CASC Eligible
Member, and must provide advance notice to the JFSA of your intention to support
trading in a crypto asset. Please further revise to clarify whether your status under the
Green List or CASC System is expected to change, and if so, include disclosures that
address the timing of such change, how such change will affect your internal approval and
risk assessment processes, and the attendant risks related to the foregoing.
Coincheck Management's Discussion and Analysis of Financial Condition and Results of
Operations
Recent Developments and Outlook, page 214
17.We note your disclosure that the table shows monthly operating data on a non-
consolidated basis.  Please revise your filing to present this information on a consolidated
basis or tell us in detail and revise your filing to clarify what non-consolidated data
represents and why presenting this information on a non-consolidated basis provides more
relevant information.
18.Please explain or revise this section to clarify inconsistencies between the graphical data
in draft Amendment No. 2 vs. draft Amendment No. 3. For example:
•The “Customer assets by currency” chart on page 217 appears to show ¥200 billion in
FY21-3Q, whereas the corresponding chart in draft Amendment No. 2 appeared to
show approximately ¥450 billion in the same period.
•The “Revenue and Total Marketing Costs for Customer Acquisition (Marketplace
platform)” chart on page 221 shows customer payback (right bar) totaling ¥1.315
billion in FY20-4Q, whereas the corresponding chart in draft Amendment No. 2
appeared to show as much as ¥7 billion in customer payback (right bar) in the same
period.
19.We note your response to comment 11 and your disclosure that you are seeking to
diversify your options for placing cover transactions in order to limit your dependence on
other exchanges by seeking market makers with which you can execute cover transactions
without pre-funding deposits. Please discuss whether and to what extent you have been
able to execute cover transactions through market makers without pre-funding deposits.
Please also disclose whether and to what extent relying on market makers rather than
exchanges to execute cover transactions may impact your results of operations, and amend
your disclosure to discuss any related risks.

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March 23, 2023
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Notes to the Consolidated Financial Statements
3. Significant accounting policies
(4)(a) Crypto assets held, page F-66
20.Please revise to disclose that the crypto assets held (current assets) are primarily obtained
through the Coincheck lending program.
21.Please provide us your analysis of the applicability of IFRS 16 to the crypto assets
received in your crypto asset borrowing transactions.
22.We note your response to comment 69 in your letter dated July 29, 2022 related to the
accounting for crypto assets deposited by customers. Please address the following:

•More clearly articulate your analysis as to whether such deposits represent assets of
the company.  For example, your response has a parenthetical citation to Conceptual
Framework 4.20, but it is unclear how you contemplated the contractual restriction in
concluding whether the company has the present ability to direct the use of the crypto
assets deposited.
•Explain what the following phrase from your response means and how it impacts
your accounting conclusion: “… related laws and regulations do not expressly
prohibit the Company from disposing of crypto assets deposited at its discretion …".
•Explain why your Terms of Use and Terms and Conditions do not expressly prohibit
you from disposing of crypto assets at your discretion.  As part of your reply, tell us
whether you have the right to pledge, rehypothecate, encumber, or otherwise transfer
crypto assets deposited by customers.
•Explain whether the user’s preferential right to payment in bankruptcy is a creditor
right or a property right and how the nature of this right impacts your accounting
conclusion.  For example, we note your response describes the right as the “right to
receive payment in priority over other creditors.”
(4)(b) Crypto asset borrowings, page F-67
23.Please revise to more clearly articulate what the statement “Crypto asset borrowings …
are accounted for the repayment obligation of borrowed cryptocurrencies…” means.
24.We note your response to comment 55 in your letter dated July 29, 2022 and your
response to comment 29 in your letter dated October 31, 2022 related to the accounting
for your “crypto asset borrowing” repayment obligation.  Please address the following:

•Provide us a more robust analysis demonstrating that Conceptual Framework
paragraphs 5.6, 5.7 and 6.45 provide a basis to subsequently measure the borrowing
obligation at fair value through profit and loss.
•More fully analyze whether an embedded derivative exists if IFRS9.4.3.3(c) does not
apply