TL;DR
- Japanese crypto exchange DMM Bitcoin is winding down operations after a $320 million hack compromised a wallet containing over 4,500 Bitcoin.
- The breach forced DMM Bitcoin to halt withdrawals, new account sign-ups, and trading activities, despite promises to protect customer deposits.
- Customer accounts and assets will be transferred to SBI VC Trade by March 2025 to safeguard assets during the transition period.
Japanese crypto exchange DMM Bitcoin has announced its decision to wind down operations following a massive $320 million hack. The breach, which occurred in May, compromised a private key linked to a wallet containing over 4,500 Bitcoin.
This event stands out as one of the most significant cryptocurrency breaches in Japan’s history, trailing only the notorious $530 million Coincheck hack that occurred in 2018.
Immediate Aftermath of DMM Bitcoin’s Hack
The security breach left DMM Bitcoin struggling to recover, forcing the company to halt efforts to restructure and seek alternative solutions for its customers.
Even though there were promises made that customer deposits would be completely safe, the exchange had no choice but to halt withdrawals, stop new account sign-ups, and freeze trading activities. The company also pledged to procure the equivalent amount of Bitcoin to compensate affected users, with financial backing from its group companies.
Transfer to SBI Group
In a bid to safeguard customer assets, DMM Bitcoin has reached an agreement with SBI VC Trade, a cryptocurrency exchange operated by the financial giant SBI Group.
According to the arrangement, all customer accounts and assets, including Japanese yen and cryptocurrencies, will be transferred to SBI VC Trade by March 2025. This move aims to ensure the protection of customer assets during the transition period.
Broader Implications
The DMM Bitcoin hack highlights a growing pattern of assaults on centralized exchanges throughout 2024. This year has seen several significant breaches, including a staggering $235 million incident at India’s WazirX in July, a $52 million hack targeting Singapore’s BingX in September, and a $55 million exploit of Turkey’s BtcTurk in June.
These incidents highlight the growing vulnerability of centralized platforms to cyberattacks. In response to the DMM Bitcoin hack, Japan’s Financial Services Agency issued a business improvement order to the company in September, urging it to identify the cause of the breach and strengthen its systems.
The agency pointed out concerns regarding the centralization of authority in system operations and security, as well as the absence of decentralized management for private keys related to asset management.