Tokyo: Japanese cryptocurrency firm Tech Bureau Corp said about $60 million in digital currencies were stolen from its cryptocurrency exchange, highlighting the industry’s vulnerability despite recent efforts by authorities to make it more secure.
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 September 14. It detected server problems on September 17, confirmed the hack the following day, and notified authorities, the exchange said on Thursday.
Following the hack, Tech Bureau said it had agreed with JASDAQ-listed Fisco Ltd to receive a 5 billion yen ($44.59 million) investment in exchange for majority ownership. The use of the investment will be done to replace digital currencies stolen from client accounts.
Although, the statement released by Fisco read that if the amount affected by the pilferage changes during the further investigation, the five billion yen in ‘financial assistance’ might change in value.
As per the documents which Reuters have, emergency checks on cryptocurrency exchange operators’ management of customer asset might be conducted by the Financial Services Agency of Japan.
Following the theft of $530 million in digital coins at Coincheck Inc., a cryptocurrency exchange based out in Tokyo in January, the crypto exchanges have been under close regulatory scrutiny in Japan. Since then the exchange has been acquired by Japanese online brokerage Monex Group Inc.
FSA conducted an industry-wide check after the theft in Conicheck and found careless management at many exchanges which included the lack of proper safeguards for client assets and basic anti-money laundering measures.
The recent pilferage at the Tech Bureau included the token such as Bitcoin, Monacoin, Bitcoin Cash from the ‘hot wallet’ of exchange which was reported to be worth around 6.7 billion yen ($59.67 million). Out of this 6.7 billion yen worth of digital currencies, 4.5 billion yen belonged to the customers whereas the rest 2.2 billion yen was of the exchange.
As per the industry experts, hot wallets are more vulnerable to hacks as compared to the cold wallets as hot wallets are connected to the internet.
After this recent pilferage, the ongoing regulatory review of the crypto industry been conducted by FSA is likely to get affected. Other countries are also struggling with regulating the crypto market.
As Japan encourages the technological innovation while ensuring the consumer protection, it became the first country to regulate cryptocurrency exchanges. It is mandatory for the exchanges to register themselves with FSA.
Last week, the agency informed that more than 160 entities have shown interest in getting into the cryptocurrency exchange business but approval has not been given to any entity since December last year.
