The news for Zaif appears to be getting worse and worse. The hacked crypto exchange has just received a third business improvement order from the Japanese Financial Services Agency (JFSA). Last week the exchange had a hot wallet hacked and more than $60 million was stolen in various cryptos. Earlier in the year, it admitted to a glitch in the system that allowed traders to buy Bitcoin for free. It was alerted to the glitch when one user tried to buy $20 trillion worth of Bitcoin without depositing any funds into his account.
The JFSA has been cracking down on crypto activity in the country, insisting that all active exchanges meet its stringent regulations. Zaif just can’t seem to keep up with what’s being asked of it given recent developments.
Zaif Runs Into Trouble
Following the hack last week, Zaif’s parent company sold off its majority shareholding to Fisco Digital Asset Group (FDAG) – who kindly agreed to pay investors back for their losses. The JFSA have yet to receive a report on the hack – something which it demands from its regulated exchanges. This has caused it to issue a third warning to Zaif, with it giving the crypto exchange two days to comply. The JFSA wants to know a number of details about the hack – such as how and why the hack happened, how Zaif is working to prevent further loss of funds, how it will handle the loss of investor funds, and a review of the whole situation. It has demanded all of this information by Thursday September 27th – a very tight deadline given the fact that a large number of key staff member changes have occurred.
JFSA Struggling to Cope with Demand
The JFSA has received so many applications that it cannot keep up with the demand. More and more blockchain businesses and crypto exchanges are looking to open up shop in Japan, and therefore require regulation. This huge influx of applications has caused the JFSA to hire 12 new members of staff in order to clear the backlog. This huge increase in demand can only be seen as a good thing, as it means the Japanese crypto industry is booming.
America Facing a Wave of Regulations
America is set to face a wave of new crypto regulations. A congressman is working to push three new blockchain and crypto-friendly bills through the senate and onto Trump’s desk. These new bills would completely revolutionize the American crypto industry and help it grow faster than ever before.
Zaif is running into a whole pile of trouble, and there is a good chance that it might not be able to come back from this. If it fails to deliver its report in time to the JFSA, it could risk losing its license. This would pose a huge problem for investors with funds in the platform, as they would be locked in until the platform regained its license. Potentially creating a similar situation to the Mt.Gox Saga – Zaif is on thin ice and simply can’t afford another large-scale mistake.