Business 26 September 2018Erik Gibbs
Business improvement order given to Japan’s Zaif exchange over hack
Almost a week ago, Japan’s Zaif cryptocurrency exchange was the target of a hack that saw it lose $60 million worth of cryptocurrencies. It almost immediately agreed to make restitution to its users, but only after calling on Fisco Digital Asset Group for financial assistance. Now, the country’s Ministry of Finance (MoF), through the country’s Financial Services Agency (FSA), has slapped the exchange’s owner, Tech Bureau, with a business improvement order, a type of admonishment that carries serious penalties.
The MoF announced the order on Tuesday, explaining that the company will be obligated to find out everything about the hack, as well as to create measures to ensure that another hack won’t be possibly. Tech Bureau is also required to try and determine who was behind the attack.
In addition, the company must respond to customers in order to ascertain the individual level of damage that was done, and will also have to provide routine updates to the MoF on progress made of the hack investigation.
Tech Bureau has now received two business improvement orders in the past three months. The previous order, which was similar to one sent to five other exchanges, demanded better security on the platforms.
The hack saw the exchange lose Bitcoin BCH, Bitcoin Core (BTC) and Monacoin from its hot wallets. While many exchanges have switched to the more secure cold wallet, Zaif had not caught up with the larger exchanges.
Fisco agreed to provide the financial help, but it came with a price. The company will become Tech Bureau’s majority shareholder in exchange for $45 million.
The Zaif hack was the second major hack of a crypto exchange in the country this year. Last January, Coincheck lost $530 million to hackers, reportedly the largest crypto hack in history.
According to the Japanese National Police, crypt theft tripled in the first half of 2018. However, enthusiasm has not diminished. There is still a growing number of adopters entering the space and the FSA has indicated that it anticipates over 160 applications from companies looking to start their own cryptocurrency exchanges. They’ll be up against some stiff competition, however, as large companies such as Line, Rakuten and Yahoo are already embedded in the market.
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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