Zaif Delays Customer Compensation Plan after $60 Million Crypto Theft


Zaif Cryptocurrency
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Tech Bureau, operator of Japanese cryptocurrency exchange Zaif, is yet to reveal a compensation strategy for customers who suffered losses from an infamous $60 million theft three weeks ago.

Osaka-based Tech Bureau has already halted new user registrations to focus on reimbursing customers who collectively lost ¥4.5 billion ($40 million) from the ¥6.7 billion ($60 million) theft of bitcoin, bitcoin cash and monacoin from Zaif’s custody. After initially suggesting it would reveal its framework to repay victims by September’s end, the operator stressed it required more time to finalize its compensation plan, as reported by the Nikkei Asian Review.

Hackers stole the three cryptocurrencies in a two-hour period from Zaif’s online hot wallets on September 14. As reported by CCN previously, Tech Bureau did not learn of the hack until September 17, at which point it approached the Financial Services Agency (FSA), Japan’s financial regulator, to report the breach.

The breach and the sizable theft of cryptocurrencies were finally disclosed publicly on September 20.

In a move to appease victims who suffered losses, Tech Bureau also revealed it had already entered a ‘basic agreement’ with the a publicly-listed Japanese corporation, the Fisco Digital Asset Group, which will receive a majority of the exchange operator’s shares in exchange for ¥5 billion yen ($44.59 million) in cash. The funds will directly be used to compensate customers, the Osaka-based cryptocurrency exchange said at the time.

However, the two firms continue to discuss the terms of the majority stake deal.

The Zaif hack is the second-biggest crypto exchange theft in Japan this year, after the $530 million NEM hack from Tokyo-based exchange Coincheck earlier in January. Now the largest crypto theft in history, Coincheck outlined its compensation strategy a day after disclosing the theft, dispersing refunds in Japanese yen on March 12 – nearly 6 weeks after the hack. A month later, the embattled exchange was acquired by major Japanese online brokerage Monex.

Tech Bureau is also facing scrutiny with a ‘business improvement order’ from the FSA after it was struck by administrative penalties from the financial regulator. The use of hot wallets to store customer funds, in particular, has drawn fire from government regulators. Japan’s own self-regulatory industry body, the Japan Virtual Currency Exchange Association, is looking at mandating norms that enforce a ceiling of 10% of 20% of customer assets in exchanges’ hot wallets, the report added.

Featured image from Shutterstock.

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Source: https://www.ccn.com/zaif-delays-customer-compensation-plan-after-60-million-crypto-theft/

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