Japanese Cryptocurrency Exchange Hacked, $60 Million Loss Reported

Japanese startup Tech Bureau admitted on Thursday that its cryptocurrency exchange Zaif had been hacked, with an estimated loss of about $60 million worth of Bitcoin and two other digital currencies.

According to a local report, hackers managed to steal 4.5 billion yen from users hot wallets, while 2.2 billion yen was stolen from the assets of the company, The total losses amounts to 6.7 billion yen or around $59.7 million.

More about the Hack

Tech Bureau Inc, which operated Zaif said in a statement that its exchange had been hacked into over a two-hour period on Sept. 14. A press release revealed that an error was detected on September 17, after which Zaif promptly suspended deposits and withdrawals. On September 18, on realising the error was actually a hack, The Japanese financial regulator, the Financial Services Agency (FSA) were informed.

An internal investigation found that the crypto holdings that were stolen include 5,996 Bitcoin and an unspecified amount of both Monacoin (MONA) and Bitcoin Cash (BCH). Explaining why the MONA and BCH figures are still unknown, Tech Bureau announced that the internal servers still hadn’t been restarted a bid to try to mitigate damage, even during the investigation stage of this case

Zaif, which is the the 101st largest cryptocurrency exchange in terms of trade volume according to CoinMarketCap, admitted to a “system glitch” that allowed users to temporarily acquire trillions of dollars worth of Bitcoin (BTC) for free in February. 16 customers were accidentally able to “trade” yen for cryptocurrency at a rate of 0 yen per coin.

The Way Forward

After the hack, Tech Bureau said it had agreed with JASDAQ-listed Fisco to receive a 5 billion yen investment in exchange for majority ownership. Zaif and its parent company explained that it the damage report had already been filed and dialogues opened with local authorities to catch the perpetrators of the hack and to ensure that such an event doesn’t occur again.

Zaif explained that they plan to recover from this major setback by receiving 5 billion yen ($44 million) in compensation from Fisco Digital Asset Group in exchange for the Jasdaq-listed firm to acquire a majority stake in Zaif, while also releasing half of the exchange’s directors and corporate auditors in an apparent show of force.

Curiously, the market appeared to be unaffected by this hack, though history shows that similar occurrences saw Bithumb, CoinCheck, and CoinRail lose large sums (tens, if not hundreds of millions of dollars) of customer funds over the course of the past year or so.

Recurring Nightmare

The breach follows the high-profile theft of $530 million earlier this year at Tokyo-based cryptocurrency exchange Coincheck in one of the world’s biggest cyber heists that forced regulatory bodies to crack down on establishments and establish resource management protocols. Coincheck which has since been taken over by Japanese online brokerage Monex, revealed that the hack resulted in a loss of 523 mln NEM coins, worth approximately $534 mln around Jan. 26. The coins were stolen via several unauthorized transactions from a hot wallet.

The Coincheck Heist overtook the Mt. Gox hack by about $50 million. Mt Gox was launched in 2010 by US programmer Jed McCaleb, Gox expanded rapidly and by 2013 was the undisputed largest Bitcoin exchange in the world handling as much as 80 percent of all Bitcoin transactions. The hack that led to the collapse of Mt. Gox is still to this day shrouded in mystery as the month of February 2014 saw a confusing procession of events.

Japan’s National Police Agency has revealed that a staggering 60.503 billion yen ($540 million) worth of crypto was stolen in the first six months of 2018, Asahi Shimbun reports September 20. The agency is said to have stated that the number of reported incidents involving crypto thefts has hit 158 over the course of the first half of this year, triple the number of incidents reported for the same time period in 2017. The Echoes of these incidents will continue to haunt the crypto industry until regulatory bodies step up and take action to secure the market.

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