Japan Hit By Another Cryptocurrency Exchange Hack

Here’s news about yet another cryptocurrency hack that has impacted Japan. Zaif, the Japanese cryptocurrency exchange platform has been attacked and hackers have got away with 6.7 billion yen ($60 million) worth of company and user funds. It’s the Osaka-based Tech Bureau Corp that operates Zaif.

Reuters reports- “Japanese cryptocurrency firm Tech Bureau Corp said about $60 million in digital currencies were stolen from its exchange, highlighting the industry’s vulnerability despite recent efforts by authorities to make it more secure.”

The hack has reportedly happened on September 14, 2018, between 5 p.m. and 7 p.m. local time and it was noticed by the exchange on September 17, 2018. The breach was reported to the authorities the next day.

The Reuters report, dated September 20, 2018, says, “Tech Bureau, which had already been slapped with two business improvement orders by regulators this year, said its Zaif exchange was hacked over a two-hour period on Sept. 14. It detected server problems on Sept. 17, confirmed the hack the following day, and notified authorities, the exchange said on Thursday.”

As mentioned, Japan’s Financial Services Agency (FSA) has already issued two business improvement orders (one in March 2018, the other in June 2018) to Tech Bureau Corp for its lax management structure. These had happened in a span of three months, the first one in March 2018 and the second one in June 2018. Reports say that FSA is likely to issue a third warning now.

The cryptocurrency stolen include bitcoin, monacoin, and bitcoin cash; of the $60 million stolen, $37.8 million were bitcoin funds. Bitcoin Magazine reports, “Of the stolen money, the hacker siphoned 4.5 billion yen (about $40 million USD) from user accounts and 2.2 billion yen (just under 19.5 million USD) from the company’s own assets. The three virtual currencies stolen include bitcoin, monacoin and bitcoin cash. Of those, $37.8 million were bitcoin funds (5,966 BTC).”

The hackers had stolen all the cryptocurrency from a server that manages the exchange’s hot wallet (the wallet that remains online for immediate transactions). The exact number of bitcoin cash and monacoin stolen would come to light once Tech Bureau Corp gets its servers back up.

The cryptocurrency exchange has suspended its services temporarily. The services would be restored once the network is restored. Reports also say that Tech Bureau Corp plans to pay back its customers and that the company had already arranged for a 5 billion yen ($44.59 million) investment.

The Reuters report says, “Following the hack, Tech Bureau said it had agreed with JASDAQ-listed Fisco Ltd (3807.T) to receive a 5 billion yen ($44.59 million) investment in exchange for majority ownership. The proceeds from the investment would be used to replace the digital currencies stolen from client accounts. However, Fisco said in a statement the 5 billion yen in “financial assistance” may change in value if the amount affected by the heist changes upon further investigation.”

This data breach proves to be another setback for Japan, a country that has been trying its best to regulate its cryptocurrency exchanges. The Tokyo-based Coincheck had suffered a hack earlier this year, incurring a loss of $530 million worth of NEM tokens.