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Japanese Exchange Zaif Falls Victim to Crypto Hack; Loses $60 Million

Japanese Exchange Zaif Falls Victim to Crypto Hack; Loses $60 Million

Reading Time: 2 minutes by on September 21, 2018 Altcoins, Bitcoin, Crime, Exchange, News, Regulation

When it seems things couldn’t get worse during the cryptocurrency bearish market, the community woke up to a nasty shock on September 17, 2018. A Japanese exchange Zaif reported that it was the victim of a breach which led to a loss of cryptocurrencies worth $60 million.

Compensation Deal Agreed for Customers

In a statement that was partly an apology, the licensed exchange Zaif, operated by Tech Bureau, stated that unusual activity was detected almost a week ago when the services went down for some time. However, no attention had been paid to it.

On Thursday, however, the exchange carried out an internal investigation, following which it realized, a fair amount of crypto assets had been removed following a reported hack. In a statement, the exchange reported:

“In order to respond to customer’s deposit/withdrawal, we keep the customers’ virtual currencies in [a] hot wallet (part cold wallet). However, on September 17, we noticed an unauthorized access from an outside source that had been conducted from between 5 pm and 7 pm on the server responsible for managing the hot wallet for the deposit and withdrawal, and the virtual wallet that in turn, manages the hot wallet.”

The exchange said that virtual currencies such as bitcoin, bitcoin cash and monacoin (BTC, BCH, and MONA) were illegally remitted. Unfortunately, the exchange is unable to divulge the exact details of the unauthorized access since this case is a criminal. Investigating officers have requested that the exchange file a damage report and to prevent the same kind of crime in the future. As a part of this investigation, authorities asked Zaif to conceal details of the case.

Zaif has also reach an agreement with JASDAQ-listed Fiscal Co. to pay $44.5 million in compensation for the losses. 

Hackers Get away with 5,966 Bitcoins

According to the statement, the missing amount of cryptocurrencies include 5,966 bitcoin whereas the quantity of missing Monacoin and bitcoin cash is not known. The reason why the exchange is unable to give an exact amount is that the servers are down at the moment.

Tech Bureau added that once they cross verified the hack on September 17 and 18, they reported the crime to the Treasury Department, the Financial Services Agency (FSA), and other relevant authorities.

In similar news, after the FSA conducted an audit of all the cryptocurrency exchanges in Japan, post the Coincheck hack, Zaif was one of the exchanges that had been flagged by the regulators. The FSA directed the firm, among others, to improve their style of operations on at least two occasions.

 

How can crypto exchanges tighten their security? Let us know what you think in the comments section.

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