Business 11 October 2018Dan Taylor
Embattled crypto exchange Zaif lays out plan for customer financial support
The embattled Japanese cryptocurrency exchange Zaif has published its plan for customer financial support, in the wake of a hack that cost the firm losses of up to JPY6.7 billion ($59.7 million). The attack resulted in Zaif’s parent company, Tech Bureau Inc., seeking external support to cover stolen customer assets.
With the details published on Wednesday, the firm has effectively announced its business will be transferred to Fisco Digital Asset Group, which is expected to conclude in November. In the documentation, Tech Bureau Inc. noted that the business transfer method was the best solution to the issue, factoring in the need to minimise risks and to protects its customers.
Tech Bureau reported that it had reached a basic agreement involving consideration last Sept. 20 to provide “financial support of JPY5 billion, enter a capital alliance enabling acquisition of a majority of the Company’s shares and allow for a majority of directors and the dispatch of an auditor.”
That deal, however, seeks “to pursue the business transfer method from the viewpoint of avoiding risk for those supporting and due to the requirement to implement a decision rapidly to protect customers.”
Monacoin holders caught up in the attack will be reimbursed in a 60/40 split of crypto to fiat, and at an agreed price of JPY144.548 per coin, or about $1.28. As of Wednesday, all Monacoin transactions on the platform have been halted, with an announcement on resuming trade expected at a later date.
All buying and selling in Bitcoin Cash (BCH), as well as BTC, remains unaffected, and will continue unimpeded. However, deposits and withdrawals have also now been frozen, to be resumed when the transfer of ownership to Fisco is complete.
The plan comes after Japan’s Financial Services Agency (FSA) issued another improvement notice to Zaif—the third notice of its kind demanding the exchange steps up its internal processes. The most recent notice, issued in September, follows on from similar notices from March and July of this year.
The plan shows the devastating impact of the theft on the exchange, and serves as a cautionary tale for other exchanges in the importance of robust security. It remains to be seen whether the deal will be enough to provide the support Zaif’s investors now so desperately need.
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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