Japanese Regulators Issue Immediate Response on Zaif Crypto Exchange Hack

Japanese Regulators Respond to Zaif’s Hack

It looks like the crypto market will simply not be free from hacks soon as another one just happened in Japan. Hackers stole an amount of around $59 million USD in cryptos from a local exchange named Zaif.

According to the reports, it took several days until the platform noticed that it was breached, which has caused the attention from the regulators of the country to be moved towards the company. The Financial Services Agency (FSA) of Japan has responded quickly to the hack and launched an emergency investigation.

Zaif was already regulated and under the scrutiny of the agency and it is one of the 16 regulated exchanges in the country. The company has announced on September 20 that it was hacked on September 14 but it only noticed the breach on September 17. According to it, at least 5,966 BTC were stolen from the company, which caused a damage of around $60 million USD.

The company also believes that BCH and MONA were stolen with the BTC that the company lost.

The amount of money lost can be even higher than $60 million USD, it looks, as the company is not yet fully know how much Bitcoin Cash (BCH) and MonaCoin (MONA) were stolen from the hot wallets of the users.

After the announcement, the FSA went to Osaka, where the company is based, and confirmed the circumstances of the case and the security measures of the company. At the same day, the FSA launched a survey to understand better how companies are securing the customers’ property on the exchanges.

This new problem appeared while the FSA is still dealing with the aftermath of the Coincheck hack, which happened in January and made the company lost about $534 million USD in NEM tokens. According to the agency, it has been inspecting the security of exchanges during on-site inspections and 23 crypto exchanges already showed problems of security.

Zaif Had Already Received Two Business Improvement Orders

The FSA had already sent two orders for Zaif to improve its business security, one in March and the other one in June. Even with the sanctions, though, the exchange did not seem to care. Now, the company will likely receive a third order. Some members from the government appeared to be concerned with the attitude from the exchange.

In March, Zaif was one of seven exchanges to receive the notice for their lack of proper internal control systems. As it took so much time for the exchange to perceive the hack, it is natural that there is going to happen a bad repercussion to the company.

Japan Virtual Currency Exchange Association (Jvcea) is also focused on the issue. The association, which is made up of the 16 registered crypto exchanges in the country, has affirmed that they request the company to take measures for the protection of the users and for all members to conduct an emergency inspection on their management systems.

After the hack, many exchanges conductors their own inspections to be sure that they were safe. Bitflyer, the major exchange in Japan, has affirmed that nobody has breached their systems. GMO Coin, another big exchange, has also made the announcement about the possibility of theft and affirmed that they check the balance every business day to protect the customers from these issues.

Bitpoint has notified its customers that it has also carried out re-inspections to confirm that the virtual currency reserves of the company are intact.

Not The First Time

While not as bad as this time, Zaif already had problems before. In February 2018, the company has admitted that a system glitch allowed users to acquire trillions of dollars in BTC for free. The breach was, once again, reported after several days.

The exchange managed to cancel all the transactions but it could have been hit hard as one customer tried to sell 2,200 trillion yen ($20 trillion USD) in Bitcoin before the issue was finally solved. This means that the company is lacking in security for a good amount of time until now.

Tech Bureau, the owner of Zaif, will now sell a big share of the company to pay the uses back. This means that, even if the exchange does not actually improve its security systems, it has certainly paid its toll.

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