DMM Bitcoin, a major cryptocurrency exchange in Japan, announced plans to cease operations following a May hack that led to the theft of $320 million in Bitcoin.
DMM Bitcoin Suffers Major Loss
In late May, DMM Bitcoin experienced a significant security breach that led to the theft of more than 4,500 Bitcoins from one of its wallets. The breach was traced back to a vulnerability in the exchange's private keys, with the stolen Bitcoin valued at approximately ¥48.2 billion (around $320 million). This incident was confirmed as the largest crypto hack in Japan in 2024. Subsequently, the company has restricted several services, including crypto asset withdrawals.
Regulatory Scrutiny and Systemic Failures
In September, following the hack, Japan's Financial Services Agency (FSA) issued a business improvement order to DMM Bitcoin. The FSA criticized the company's management practices, particularly the concentration of authority within a single team that handled both system operations and security. The agency highlighted the lack of decentralized management, especially concerning the private keys vital for securing customer funds.
Moving Customer Assets to SBI VC Trade
As part of restructuring, DMM Bitcoin has entered into an agreement with SBI VC Trade to transfer all customer assets to the exchange. The process is expected to be completed by March 2025. SBI VC Trade, part of the SBI Holdings group, reportedly has the necessary infrastructure to handle the transfer of both fiat and crypto assets. Users of DMM Bitcoin will see their deposits, including both crypto and yen, moved to SBI VC Trade's platform.
In light of the severe consequences of the hack, DMM Bitcoin is taking steps to safeguard its clients' assets and plans to wind down operations, transferring responsibilities to SBI VC Trade.
