Cryptocurrency Exchange Zaif Hacked for $59 Million, FISCO Group Steps In with Support

Tech Bureau, Corp., which operates the major Japanese cryptocurrency exchange Zaif, announced that it sustained damages from hacking due to unauthorized access to a portion of Zaif’s hot wallet function used to deposit and withdraw currency. The estimated total amount of damage is equivalent to about 6.7 billion yen (59 million U.S. dollars), (4.5 billion yen (40 million U.S. dollars) of which were client assets), and Tech Bureau is still investigating the number of affected customers. Following the incident, FISCO Group announced it would offer support to Tech Bureau.

The Fisco Cryptocurrency Exchange (FCCE), a FISCO Group company, has had a connection to Zaif as an OEM supplier since 2016. Although it completed separation from the OEM system on September 12 this year, CAICA, another FISCO Group company, will support the rebuilding of Zaif’s system as it has an adequate grasp of the logic used for the system.

A basic agreement has been concluded between Tech Bureau, Corp. and FISCO Digital Asset Group, the parent company of Fisco Cryptocurrency Exchange Inc. which has capital ties with FISCO. The parties will begin consideration of solutions such as financial support and capital participation with a majority of shares through FISCO Digital Asset Group’s affiliated company. More specifically, the parties will seek solutions that strive for a formal agreement regarding 5.0 billion yen (44 million U.S. dollars) in financial support, the eventual attainment of a majority of Tech Bureau’s shares, and dispatch of more than half of its Directors and one Auditor to Tech Bureau, by way of the affiliated company.

In the event that a formal agreement is concluded, FISCO Group is expected to operate FCCE separately from Zaif without integration. With making improvements to Zaif’s internal control system as the highest priority, the parties will first pursue development with the fundamental mindset of Zaif providing services to individual clients and FCCE providing services to corporate entities. Furthermore, in a cryptocurrency industry which continues to experience penetration of capital from major corporations, FISCO Group will define its position by applying its own information distribution network to Zaif and FCCE services.

Coincheck, another major cryptocurrency exchange in Japan, was hacked in January 2018 with about 540 million NEM tokens (XEM) stolen. Later in April, Japanese financial holding company Monex Group, Inc. proposed acquiring Coincheck, marking its entry into the cryptocurrency business. After the Coincheck hacking incident, the industry has been witnessing the entry of major corporate players and reorganization amid strengthened monitoring by Japan’s Financial Services Agency. Yahoo Japan Corporation entered the cryptocurrency business through its subsidiary, Z Corporation Inc., by gaining 40% minority stake in the cryptocurrency exchange operator BitARG Exchange Tokyo in April 2018. Everybody’s Bitcoin, Inc. was also acquired in August 2018 by Rakuten Card Co. Ltd., a subsidiary of the major Japanese IT company Rakuten, Inc.