Forced Deal and FSA Scrutiny: What Do We Know About Japan's Latest Hack

Published on by Cointele | Published on

This week, yet another major hack occurred in Japan: Hackers stole around $59 million worth of cryptocurrencies from local cryptocurrency exchange Zaif.

Zaif was already under the FSA's scopeZaif was founded in May 2014 by Osaka-based startup Tech Bureau Inc. It is one of the 16 crypto exchanges in Japan which have received approval from Financial Services Agency - since the amendment of Payment Services Act in April 2017, all crypto exchanges in the country are required to register with the regulator.

Specifically, in March, Zaif was one of the seven exchanges criticized for a lack of "The proper and required internal control systems" by the watchdog.

The FSA has been keeping a tight grip on local exchanges, firmly reacting to security breaches after two high-profile scandals: January's unprecedented $532 million Coincheck hack and the infamous collapse of Tokyo-based Mt. Gox.Now, according to government sources cited by Japan Times, the exchange is in danger of getting a third warning from the FSA, which also inspected all the other exchanges in the country for similar breaches.

Tech Bureau hasn't disclosed any more details about the hack, citing a criminal investigation that has been launched by the FSA.It took several days for the exchange to detect the security breachAccording to Tech Bureau's press release, the exchange spotted a server error on Sept. 17, after which Zaif suspended deposits and withdrawals.

On Sept. 18, the exchange realized that the error was a hack and reported the incident to the police and the FSA.It wasn't the first timeIn February 2018, Zaif admitted to a "System glitch" that allowed users to temporarily acquire trillions of dollars worth of Bitcoin for free.

The exchange has already taken its tollAccording to Fortune sources, the FSA has asked Tech Bureau to submit a report on the breach.

Tech Bureau has promised to refund clients who lost assets due to the attack, and "Immediately" signed a deal with a Fisco Ltd., a Tokyo-based financial markets research firm which also has a cryptocurrency exchange in their operation.

The Osaka-based startup will reportedly receive 5 billion yen in exchange for selling a large stake of the company, making Fisco the majority shareholder.

Currently, Zaif is the 37th largest cryptocurrency exchange by reported turnover, and its daily change volume is down 17 percent, according to CoinMarketCap.

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