Japanese Crypto Exchange Zaif Loses Nearly $60 Million in Security Breach Hack

Japanese Crypto Exchange Zaif Loses $60 Million in Hack

Japan-based cryptocurrency exchange Zaif lost $60 million in a hack last week. The bitcoins were stolen from a hot wallet used for customer withdrawals and deposits. Zaif announced the news publicly earlier today with promises to compensate customers for lost funds.

The hackers made off with 5966 BTC, or about $37 million of BTC along with significant amounts of Bitcoin Cash (BCH) and MonaCoin (MONA). Losses are estimated at around $60 million total.

Zaif confirmed the hack in a tweet on September 20 (in Japan) with a link to a press release. Zaif issued the press release to explain the reason behind their decision to suspend deposits and withdrawals from the platform.

Zaif first suspended deposits and withdrawals earlier today, sending users into a frenzy of speculation. Soon after, Zaif released the press release confirming the hack.

The press release states that the hack occurred on September 14. At around 17:00 on September 14, hackers gained access to Zaif’s hot wallet used for deposits and withdrawals of customer funds. Hackers maintained access to the wallet until 19:00.

The compromised wallet contained three cryptocurrencies, including BTC, MONA, and BCH. Zaif claims that 5966 BTC ($37 million) were stolen, although they do not yet know how many MONA or BCH tokens were stolen. The matter is under investigation.

“It is estimated that the total loss due to the damage…is equivalent to about 6.7 billion Japanese Yen,” explains the Zaif press release via Google Translate.

6.7 billion Japanese Yen is equivalent to about $60 million USD. We know that Zaif lost about $37 million worth of bitcoin, but the press release suggests they lost nearly twice that amount in Bitcoin Cash and MONA.

“The reason for not being able to determine the damage quantity at the moment is that the server is not restarted until secure confirmation of safety is ensured in order to prevent secondary damage. As soon as the quantity of the lost virtual currency is determined, we will report it promptly.”

Zaif claims that of the 6.7 billion lost Japanese Yen, customer assets compromised about 4.5 billion, with 2.2 billion Yen consisting of company assets.

Zaif claims that the company took action immediately after detecting the hack.

“Our company detected server abnormality on September 17…and hacking damage was confirmed on the following 18th,” explains Zaif in the press release.

“Currently, we are checking and strengthening security, rebuilding the sever, etc. in order to restart the system of depositing / withdrawing virtual currency. We are committed to restoration as soon as possible.”

Zaif also added that it has secured a 5 billion Yen loan to pay back customers affected by the hack. However, they acknowledged that it’s a fluid situation and that final decisions on customer compensation have not yet been made.

In a similar situation from earlier this year, Japan’s financial regulator intervened after major Japan-based exchange Coincheck was hacked. That exchange was ordered to pay customers back after a $530 million hack in 2017.

Zaif has been safely operating since 2014. The exchange is based in Osaka, Japan. Coinmarketcap reports that Zaif sits at #90 in the world in terms of 24 hour trading volume, with the most popular pairs being XEM/JPY, MONA/JPY, XEM/BTC, and ETH/BTC.

We’ll keep you posted as news about the $60 million Zaif crypto exchange hack continues to come out.

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