Hackers Steal $59 Million Worth of Cryptocurrencies in Japan

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A Japanese based digital currency exchange known as Zaif has lost around $60 million in cryptocurrencies to hackers, WSJ reports.

The exchange, which is operated by Tech Bureau Corporation, was hacked on Friday, Sept. 14 between 5:00 p.m. and 7:00 p.m. local time. The firm said it became aware of suspicious activities on its “hot wallets” on Sept. 17 and reported the matter to authorities.

Hot wallets are cryptocurrency addresses where digital currency exchanges store funds for instant transactions. However, the wallets are highly prone to hacks due to their simple authentication systems and also because they are connected to the internet.

Virtual currency exchanges usually store most of their cryptos in “cold wallets”, which are more complex and not available online. Zaif halted all user withdraws and deposits after the hack, as its team works to ensure that the criminals are completely absent from its servers.

The thieves made off with Bitcoin Cash, MonaCoin and Bitcoin, all three worth ¥6.7 billion, or $60 million when combined. Of the ¥6.7 billion, ¥4.5 billion were customer funds, while ¥2.2 belonged to the exchange.

Zaif lost 5,966 BTC valued at $38.2 million at the current market price of $6,403 each. The company is yet to confirm the amount of Monacoin and Bitcoin Cash that was stolen.

Tech Bureau said it plans to sell a majority control of Zaif to JASDAQ-listed Fiasco Ltd in exchange for a ¥5 billion loan, which it will use to settle customer losses. In February this year, the exchange also suffered a system glitch that allowed some customers to ‘purchase’ virtual currencies for free.

Hackers have stolen about $540 million worth of digital currencies in the first half of 2018 from exchanges in Japan, according to The Next Web. Coincheck, a 6-year-old exchange based in the country’s capital hit headlines earlier this year when unknown people hacked it and made away with ¥58 billion, or $547 million worth of a cryptocurrency known as NEM.

It is also hard to forget the case of Mt. Gox, another Japanese based cryptocurrency exchange that shut its doors four years ago following a massive cyberattack that resulted in the loss of 850,000 BTCs. Even though 200,000 BTCs were eventually recovered, authorities have never recovered the remaining 650,000 BTCs.

As the country continues to embrace cryptocurrencies, the government is working to create important regulations that are aimed at preventing hacking and other crypto-related problems. Authorities have intervened in the case of Coincheck, and forced the exchange to make good all losses suffered by its customers.

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