Business 23 February 2018

Jasmine Solana

Blunder at Japanese exchange lets investor buy $20K worth of BTC for free

Yet another domestic cryptocurrency exchange is being investigated in Japan. This time, it’s over a system glitch that allowed users to buy legacy Bitcoin (BTC) for free.

The Zaif exchange is a government registered cryptocurrency exchange operated by Osaka-based Tech Bureau Corp. On Feb. 16, Zaif reportedly experienced a system error that affected the exchange’s price calculation system, enabling customers to buy cryptocurrencies for nothing.

The glitch, which lasted for 18 minutes, gave at least seven Zaif customers a brief window to get their hands on the free coins. According to The Asahi Shimbun, one of those customers placed an order for JPY2,200 trillion (US$20 trillion) worth of BTC—and then tried to resell it.

Tech Bureau resolved the issue less than two hours later, as well as cancelled the transactions and corrected the users’ balances, according to the Japanese news outlet. However, a separate Reuters report noted that the exchange “was still trying to resolve the issue with one customer.”

Word soon spread that an abnormally high quantity of cryptocurrencies up for sale, and later caught the attention of the Financial Services Agency (FSA), prompting a fresh probe into the safety of Zaif’s system and business practices.

A Tech Bureau official has already “pledged to take measures to prevent further glitches,” according to reports.

Tech Bureau had already been subjected to an on-site visit following last month’s theft of $530 million worth of digital money from Coincheck—an incident that went down as the biggest theft in world history, effectively dethroning the infamous Mt. Gox hack. The FSA recently added 15 more cryptocurrency exchanges that have pending license applications to their list of on-site inspections.

Unlike Coincheck, Zaif is one of the 16 exchanges approved by the Japanese government to offer cryptocurrency-related services in the country. The registered exchanges are reportedly planning to form a self-regulatory body in April following the recent wave of security breaches.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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