Yet another Japanese cryptocurrency exchange has been targeted by hackers: this time Zaif suffered losses worth 6.7bn yen ($60m) earlier this month.
Virtual currencies including Bitcoin, Monacoin and Bitcoin Cash were stolen from the exchange’s hot wallet, with 4.5bn yen’s worth ($40m) belonging to Zaif customers.
The incident occurred over a two-hour period on September 14, with server issues detected three-days later and the authorities notified shortly after. The firm is withholding precise details of the attack while the authorities investigate.
Parent company Tech Bureau has reportedly already been hit with two business improvement orders this year and was subsequently forced to sign an agreement with investment group Fisco that will see the firm receive 5bn yen to help replace the lost coins, in exchange for majority ownership.
This is just the latest in a long line of cyber-attacks on Japanese crypto firms. Most famously, Tokyo-based Coincheck lost $530m worth of virtual currency earlier this year.
That could explain why the Financial Services Authority has created a new regulatory framework for such companies operating in Japan — the first of its kind to do so.
However, regulation is not a silver bullet, according to Ilia Kolochenko, CEO and founder of web security company High-Tech Bridge.
“Digital coins are extremely attractive for cyber-criminals who can easy launder them and convert into spendable cash, even in spite of some losses due to ‘transactional commissions’,” he said. “Most of these operations remain technically untraceable and undetectable, granting an absolute impunity to the attackers. Thus, cyber-criminals will readily invest into additional efforts to break in, even if security is properly implemented and maintained.”
Earlier this year, Twitter banned cryptocurrency ads on its platform in an attempt to crack down on rising fraud levels. An Ernst & Young report from January revealed that 10% of all ICO funds are stolen by hackers or fraudsters, amounting to almost $400m in cumulative losses at the time of the research.