Japan’s Financial Services Agency (FSA) is putting pressure on the Zaif crypto-currency exchange following a hack earlier this month which resulted in the loss of over $60 million.
The regulator has claimed that the firm operating the exchange, Tech Bureau Corp, has failed to provide adequate details regarding the incursion and nor has it explained delays in reporting the attack. According to Reuters, the FSA has issued a business improvement order to the Osaka-based company asking how it intends to compensate its customers.
It was reported in Japanese media that the Zaif crypto exchange had been hacked during a two hour period on September 14th, resulting in the theft of 5,966 Bitcoins valued at the time at an estimated $US39 million. It was also revealed that the attackers gained access to the exchange’s hot wallets and lifted Bitcoin Cash and Monacoin, Japan’s own crypto coin, bringing the total sum stolen to around 7 billion yen ($60 million).
A senior official at the FSA told reporters: “We have not received enough explanation on what exactly happened. What they told us is an employee’s PC was hacked.” The regulatory body warned that further action against the company could be taken. Tech Bureau has in the past been issued with business improvement orders, and this latest hack has been described by the FSA as “extremely regrettable”.
The first order, issued in March, called for the establishment of an effective risk management system and a system to respond appropriately to customers. Another one followed in June calling for the establishment of a business management system, legal compliance system, risk management system related to money laundering and terrorist financing, the separation of management of user property and further protective measures regarding virtual currencies.
Japan became the first country to officially regulate crypto-currency exchanges last year when it also declared digital currency legal tender. Since then, while it has become the most crypto friendly country in the world, it has also attracted the bad elements. Part of its effort to clean up the industry included restrictions on anonymous crypto-currencies such as Monero and Dash.
January’s Coincheck hack, when over $530 million in crypto was stolen, still hangs over the industry like a dark cloud. It prompted the FSA to tighten standards, and now all exchanges are required to register with them and to adhere to policies to operate legally within the country.
Despite a statement from the regulatory body earlier this month saying that over 160 organizations have expressed interest in entering the crypto-currency exchange business, it has issued no new approvals since December last year.