One month after Japan was the location of the biggest ever cyber hack, when over $400 million worth ot NEM coins was stolen from the Tokyo-based Coincheck exchange, overnight another major technical error at a rival Japanese cryptocurrency exchange led to further questions about the safety and security of crypto investments.
As a result of a "system glitch" at the Osaka-based Zaif cryptocurrency exchange, some customers were able to claim digital tokens for $0. The Asahi Shimbun reports that glitch - which lasted for 18 minutes from 5:40 p.m. to 5:58 p.m. on Feb. 16 - affected Zaif’s price calculation system, enabling seven customers to buy cryptocurrencies for free, with one client "purchasing" Bitcoin valued at 2.2 quadrillion yen ($20 trillion) and then attempting to cash in on it.
The glitch was rectified by 7:34 p.m. the same day, and while the exchange voided the trades after discovering the error, it was still trying to resolve the issue with one customer who tried to transfer the "deeply discounted" bitcoins from the exchange, a spokesman told Reuters.
The customer in question was quick to realize there was a glitch and immediately tried to cash out the newly "purchased" Bitcoins: this was noticed when an abnormally high quantity of the cryptocurrency appeared for sale on Zaif, and word soon spread on the Internet that around 2.2-quadrillion yen worth of Bitcoin was on sale there. Needless to say, such a sale would have been problematic as all bitcoins in circulation are worth just $187 billion.
Tech Bureau Corp., which is behind the Zaif exchange and is a registered cryptocurrency exchange operator, is now subject to a Financial Services Agency investigation into the safety of the system and other business practices.
As Reuters notes, the registered cryptocurrency exchanges will form a self-regulatory body in April; it will set out rules for security and advertising, and will set penalties for members who don’t follow the policies, the Nikkei reported.
Japan last year rolled out the world’s first system to oversee cryptocurrency exchanges, in a bid to protect customers and stamp out illegal uses of cryptocurrencies as it sought to nurture a young and promising sector.
Meanwhile, a Tech Bureau official apologized to customers for the trouble and pledged to take measures to prevent further glitches.
While it is unclear if traders have been spooked by news of the glitch, however, the entire crypto space has traded sharply lower following the first emergence of the report.