DMM Bitcoin to Cease Operations After Major Loss
Japanese cryptocurrency exchange DMM Bitcoin is gearing up to close its operations following a staggering loss of approximately $320 million in Bitcoin due to a significant hack involving a private key breach that occurred in May. The incident left the company in dire straits, prompting it to halt its restructuring efforts and explore alternative solutions for its customers.
Transfer of Customer Accounts to SBI VC Trade
According to a report by Nikkei Asia on December 2, DMM Bitcoin plans to transfer all customer accounts and assets to SBI VC Trade, a cryptocurrency exchange run by the prominent financial institution SBI Group. This transfer is expected to be completed by March 2025, providing a semblance of continuity for affected users.
Confirmation of Customer Asset Protection
DMM Bitcoin has publicly confirmed this transition, assuring customers that their assets, which include both Japanese yen and various cryptocurrencies, will be secured throughout the process. The security breach, characterized by the company as an “unauthorized leak,” was particularly severe, as it involved the compromise of a private key linked to a wallet that held over 4,500 Bitcoin. Despite earlier assurances that customer deposits would remain fully protected, the exchange found it necessary to suspend withdrawals, halt new account registrations, and cease trading activities.
Financial Commitment to Affected Users
In light of the massive loss, DMM Bitcoin has committed to procuring an equivalent amount of Bitcoin to compensate affected users, with financial backing promised from its parent companies. The hack is now considered one of the most considerable cryptocurrency breaches in Japan’s history, second only to the infamous Coincheck hack in 2018, which resulted in a loss of $530 million.
Possible Links to North Korean Cybercrime
In July, well-known blockchain analyst ZachXBT suggested that the Lazarus Group, a cybercrime organization linked to North Korea, might have been involved in the DMM Bitcoin hack. He pointed out similarities in laundering techniques and off-chain activities, with approximately $35 million of the stolen funds traced back to dubious platforms, raising concerns about the safety and reliability of cryptocurrency transactions.
DMM Bitcoin’s History and Recent Developments
DMM Bitcoin was established in 2018 by the e-commerce conglomerate DMM Group. Recently, the company discontinued its Seamoon Protocol, which focused on Web3 gaming and anime content, citing rapid shifts in the business landscape. Additionally, a planned collaboration with Progmat to launch a stablecoin has also been put on hold, reflecting the challenges faced within the current economic environment.
Wider Trend of Attacks on Centralized Exchanges
The hack of DMM Bitcoin is not an isolated incident but part of a broader pattern of increasing attacks targeting centralized exchanges in 2024. Other significant breaches this year include a $235 million hack of the WazirX exchange in India, a $52 million breach of Singapore’s BingX, and a $55 million exploit of Turkey’s BtcTurk. Recently, XT.com, a Seychelles-based exchange, suspended withdrawals amid reports of a suspected $1.7 million hack.
Legal Actions and Continued Vulnerabilities
In the United States, federal prosecutors have charged five individuals in connection with a complex hacking operation that is said to have stolen $11 million in cryptocurrency as well as sensitive data from individuals and companies spanning multiple countries. Allegations state that the hackers targeted at least 29 individuals, with one victim reportedly losing over $6.3 million in cryptocurrencies after their email and digital wallets were compromised. Additionally, the group is accused of targeting 45 companies across the U.S., Canada, India, and the UK, illustrating the ongoing security challenges faced by the cryptocurrency industry.